What are Your Safest Investment Alternatives for Retirement?
You spend a significant chunk of your adult life working. It is thus only fair to spend your retirement in bliss, with most of your time allocated to your loved ones. Unfortunately, this idyllic retirement dream might be interrupted because of external factors, leaving you spending your sunset years frustrated. The primary issue that will cause frustration is a lack of financial security.
Many companies have made it their mission to advise retirees, as well as those who are preparing for their retirement, on the best options for achieving financial security. A Verizon pension is one of the options available to their employees as a safe investment to fund their retirement, for instance. The following are a few other choices that will help you safeguard your financial independence in retirement.
Retirement Income Fund
This is a form of specialized mutual fund that automatically allocates your cash across a varied portfolio of bonds and stocks. Your investments, in this case, will be professionally managed with a primary objective of generating a monthly income. A few forms of retirement income funds might use some of your principal to generate a higher monthly income while others preserve the principal but generate low revenues. With the retirement income fund, you have access to your principal and can withdraw your money at any point.
These are a type of insurance rather than investment, but they are primarily meant to generate an income. Immediate annuities are intended to ensure you have future income. You will make a lump sum payment to an insurance company in exchange for a guaranteed income for a set period after a specified timeframe. Your guarantee of a constant revenue with an immediate annuity is as secure as the insurer you choose for it.
With a bond, you are loaning your cash to a municipality, government, or corporation. Your borrower will agree to pay you interest on your money for a specific period and then return your principal upon the bond’s maturity. The yield or interest income you will get from your bond can become a steady source of income in your retirement. You nonetheless need an expert to look into the quality of the bonds on the market so that you have an idea of their issuer’s financial strength and make the right choice.
Dividend Income Funds
Rather than buy individual stocks, you can invest in a dividend income fund. With this option, you own and manage the dividends that will be paid to you from the stocks your money is invested in. These dividends will generate a steady income for your retirement that will increase annually when companies increase their dividend payouts. While it is easy to go for dividend-paying stocks with the highest yields, these are generally the ones with the highest risks. It is therefore essential to know the risks you will be assuming with your choice of a dividend income fund.
Most people nearing retirement are considered easy prey by people out to fleece them of their pension and saved cash. It is thus prudent to get your financial advice from a company with years of experience and registered representatives. This way, you benefit from unbiased advice on the options from the above that best suits your retirement financial security.