The Ultimate How-To Guide on Investing After Retirement

W hen people invest during their careers, they plan to save enough money to fund their retirement. As a retiree, it’s also crucial that people make the right investment choices after their retirement date. The goal is to make one’s retirement savings last as long as possible. With lifespans increasing all the time, having the know-how on making smart investment decisions during this time can help you enjoy your retirement to the maximum. This is the definitive guide on investing after retirement.

Key Takeaways:

  • Opt for mostly steady income investments such as bonds, fixed annuities, and money market accounts.
  • Allocate a proportion of the retirement portfolio to growth investments like stocks and real estate.
  • Plan in five-year segments and don’t seek more growth than needed.
  • Retirement investment plans need to take into account beneficiaries and inflation risk.

How Should You Invest After Retirement?

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The challenge of investing after retirement is finding the right balance between safe investments that protect retirement savings and investments with enough growth potential to keep them from running out during retirement. A nuanced strategy is needed that achieves both investment safety and maintains a comfortable lifestyle throughout retirement. The most important thing to remember is that adjusting to bad investment decisions without a steady paycheck becomes difficult, if not, impossible.

The balancing act for investing after retirement is to split your portfolio into mostly safer assets, such as fixed annuities, bonds, and money market accounts while allocating a reasonable portion to riskier, high-earning assets, such as stocks, mutual funds, and real estate. The following sections provide more detail on these specific asset classes.

Safer Retirement Investments

The following investment classes generally provide steadier income streams for retirees but with less opportunity for growth.

Money Market Accounts

You’ll need a liquid source of money on hand to pay for essential bills such as food, mortgage payments, rent, and clothes. Checking accounts are not the best use of cash. It’s always worth considering placing the majority of your most liquid funds in a money market account where the money can earn interest. Shop around for better interest rates.

Fixed Annuities

A fixed annuity gives recipients a certain amount of income at regular intervals for a specific time period in return for a lump sum. Retirees often purchase fixed annuities to stabilize their investment incomes because the rate of return is guaranteed. The fact that annuities guarantee a certain level of return meets the needs of many retirees desiring a steady income stream. An immediate fixed annuity is a class of annuity in which the insurer begins paying income within a month or two of purchasing the annuity.


When you purchase a bond, you loan your money to a third party. Bonds pay a steady rate of interest throughout a fixed time period. For retirees, bonds are attractive because the income they pay is steady and predictable. Governments, states, and corporations typically issue bonds to finance various expenses. Bonds can be a great way to preserve capital and invest in a way that is likely to keep up with inflation.

A more nuanced and even safer approach to bond investing is known as bond laddering. The idea is that the bond investor buys a series of short term and long term bonds. If the interest rate happens to rise as the short term bonds mature, the investor can re-invest the principal at the higher interest rate. Bond laddering is a strategy against losing out from changes in interest rates.

Growth Investments for Retirement

Retirees also need to make space in their portfolios for growth investments. The proportion of a portfolio to allocate to riskier investments with higher growth potential comes down to individual risk appetite. The following asset classes represent some growth investment opportunities for retirement.


Investing in the stock market does not need to be a young person’s game. In fact, one rule of thumb for asset allocation says that the percentage of a portfolio invested in the stock market should be 100 minus their current age. Retirement planning is more complicated and personal than following this rule. However, it’s reasonable to say that most retirees will want to invest some of their portfolios in the stock market.

It’s important to point out that within the stock market, retirees need to pick the right stocks. Chasing huge returns from trendy equities could backfire, but knowing which stocks have the highest returns can result in more dependable growth than chasing fads. Investing in large corporations with a history of paying annual dividends can provide a dependable income from the stock market.

Mutual Funds

Mutual funds represent another opportunity to seek more growth. Mutual funds are managed portfolios of equities, bonds, and other financial instruments. Retirees seeking some growth in their savings can invest in equity funds, which are invested principally in stocks. Within the class of equity mutual funds, retirees can opt for funds based on investment approach from those that aggressively pursue growth to funds aimed at generating a steady income.

Real Estate

Not every retiree will be in a position to invest directly in real estate, but for those that are, the opportunities for growth are huge. Making smart investment decisions in undervalued property can provide steady streams of income from rent or large windfalls when selling the property.

For retirees lacking in the capital to directly invest in real estate, Real Estate Investment Trusts (REITs) are a viable investment option. REITs are companies that own various types of commercial, income-producing real estate. Investing in REITs can produce large dividends, however, this comes with the risk of higher volatility.

5 Rules for Investing After Retirement

T he precise way in which a retiree allocates their investments is highly individual and dependant on various personal circumstances. However, there are some general investment guidelines that are useful to follow. Here are five strategic rules for investing after retirement:

  • Don’t neglect inflation risk
  • Consider beneficiaries
  • Don’t chase higher growth than needed
  • Plan in five-year segments
  • Consider delaying Social Security claims

Don’t neglect inflation risk

Retirees face the risk of prices rising over the course of their retirement while income remains steady and doesn’t increase. Referred to as inflation risk, this rise in prices over time is the basis upon which it’s recommended to allocate a portion of one’s retirement fund to growth investments, such as stocks and real estate. Retirees understandably want to be more conservative with their investments, but inflation risk is real and some allocation in stocks to make room for income growth is wise.

Consider beneficiaries

An important part of any retirement investment plan is to consider beneficiaries. Retirees need to make sure that they leave an inheritance for their loved ones and that this money gets to their loved ones efficiently. Creating a living trust, while being a more expensive option than a will, ensures any property owned can be passed immediately to named beneficiaries without entering probate.

Don’t chase higher growth than needed

When retirees sit down alone or with an advisor to figure out an appropriate retirement investment plan, the broad aim is to analyze expenses and desired income and come up with an appropriate return rate for the duration of retirement. Chasing higher growth than what’s needed could come back to bite retirees because this strategy will lead to taking on unnecessary risks.

A useful tip here is for retirees to separate the assets they want to accumulate and pass on to loved ones from the rest of their retirement needs. By doing this, retirees can use more aggressive investment strategies for their estate-oriented investments without risking financial security during their lifetime.

Plan in five-year segments

It’s almost impossible to create one retirement investment plan with strategies that can cover a retirement spanning 30 years or longer. Planning in five year segments is a more realistic and sensible approach because lifestyles and income needs may differ significantly for retirees from one five-year period to the next.

Consider delaying Social Security claims

Retirees with a level of retirement income to meet their expenses can consider delaying their Social Security claims. For each year up to age 70 in which retirees delay their Social Security claims, the monthly benefit increases by 8 percent. In this way, a 66-year old who only begins collecting Social Security at age 70 can 132 percent of the monthly benefit they would’ve collected at age 66.


Retirees armed with the knowledge of their investment options and strategies during retirement

are much better placed to get the most from their retirement pots and enjoy their lives to the fullest.