3 Winning Retirement Strategies for Senior Investors
If you are looking to make the most of your retirement, there are a number of retirement strategies you can use. In this article, we will look at some of the best retirement strategies to make sure you have more than enough money to last. But first, let’s check in and see if you are even ready for retirement.
Are You Truly Ready to Retire?
You may think that as you approach age 65 – or if you already are 65 – that it is time to think about retiring. But are you sure you are really ready? The first step in developing retirement strategies is to truly ask yourself this question.
In fact, a recent survey by reported by the American Psychological Association noted that 60% of workers age 60 and over would look for a new job after “retirement.” That sounds like people who are not so ready to stop working after all.
First of all, there is no hard rule that you have to fully retire at age 65. The question of whether or not to retire involves one crucial decision: will you be happier being retired then continuing to work?
Working provides many benefits to our lives. Sure, there are the financial benefits, but there are many others. For example, work can provide our lives with a sense of meaning or purpose. Furthermore, you can gain a sense of social camaraderie working with like-minded peers towards a common goal.
And yes, there are the financial impacts as well. Retirement can be up to 30 years (or more!) of unemployment. Your money must last you for that full amount of time.
Furthermore, you need to be considering things like the best healthcare options. And will you have enough cash to accomplish your major life goals like traveling the world or leaving money to your kids?
All of this should be taken into account when deciding whether it is truly the right time for you to be retiring. If you decide it is, then you need to look deeply into some retirement strategies that can help you build the retirement of your dreams.
One Key to Your Retirement Strategy: Don’t Invest What You Can’t Lose in Stocks
When developing retirement strategies, you need to keep in mind the truth about investing. Stocks are risky in the short-term. The reason you can earn so much money in the stock market is because there’s also a chance that you could lose everything you invest.
As a result, there are a number of different financial instruments in which you can invest your money that are less risky than stocks. Some of these include:
- cash
- treasury bonds
- municipal bonds
- certificates of deposit
- investment grade corporate bonds
Keeping the bulk of your capital in these instruments will help to protect you from the kinds of financial shocks you may hit in the stock market. And anyone who has been invested in stocks this year knows the truth about the volatility of the markets.
The trouble is, stocks are still the best way to grow your wealth.
Once you’ve determined the amount of money you can’t afford to lose, you are clear to invest the rest in stocks. This is what’s going to transform your retirement from mere survival mode to truly thriving. And it is a key to any good of the better retirement strategies.
That being said, here are three specific winning retirement strategies for investors:
3 Winning Retirement Strategies for Investors
Strategy 1: Focus on Great Companies
When developing their retirement strategies, investors may wonder if it’s truly possible to beat the market. Is an 8% average annual return the best you can do? Or are there paths to greater riches?
The truth is that it is absolutely possible to beat the market. And the best retirement strategies for investors will help you do so. It all starts with great companies.
Great companies are the kinds of companies that will still be standing in five, ten, twenty, or even more years from now. They have cutting-edge and innovative solutions for their customers. And they live within their financial means.
There are plenty of such companies listed on the stock market, you just have to learn how to find them. And when you snatch them up at a good price, you’ll find that it’s possible to earn much more than 8% on these stocks.
In order to learn how to pick the right stocks, I suggest reading as much as you possibly can. Actually, this is true in learning about all areas of life, not just stock picking.
The more you read from the top minds in investing, the more you’ll have a sense of the right way to go about investing in stocks. And this will help you beef up your retirement strategies endlessly.
Strategy 2: Make Sure to Include a Mix of Income Investments
The glamour of the stock market is in growth stocks. Everyone loves to hear about share prices that increase by hundreds of dollars. But smart retirement strategies are also going to focus on income investments like dividend stocks and even bonds.
Remember, the whole idea of retirement is that you are losing your main source of income: your primary job. You have to be able to make up for the income in other ways.
Sure, that can include things like social security distributions and withdrawals from your retirement accounts. But supplementing this income with interest payments from bonds and dividends from stocks is almost essential for most seniors.
If your retirement strategy doesn’t already include a significant chunk of your investment money in income investments, it may be time to reevaluate your current financial advisor, if you use one.
Strategy 3: Don’t Forget about Shorter-term Trends
In the long-term, stocks are the best performing investment. But over shorter time horizons, stocks can be risky and you can lose a lot of your capital if the markets go down.
As seniors live longer and longer, it is important to keep an eye on the future and stay partially invested in some stocks. This will help to ensure that you have money to last you throughout your retirement.
But you may not want to wait 20 or 30 years to see all of your investments pay off. You may be willing to take on some higher risk investments for a quicker payoff.
If you can afford to lose some money in the short term, it can be pay off well to take on some more risk and making shorter term trades. But to do so successfully, you need to be able to keep up with what’s going on in the stock market.
That said, it is important for this strategy to keep an eye on current stock market trends. What is the hot hand in the stock market? Are pot stocks flying high? Are tech stocks ticking up by the hour?
Some industries will always outperform others, especially in the short term. Make sure to do you homework to find the best companies to invest in within trending sectors and industries. This is the key to your short term, trend investing success.
A Final Note on Retirement Strategies for Senior Investors
Coming up with the perfect retirement strategies for your situation isn’t easy. There are many factors to consider from the psychological to the financial to your broader retirement goals.
Nevertheless, the investing strategies outlined in this article will go a long way to helping make sure your retirement is far beyond adequate. Instead, they will help you pave the way for the retirement of your dreams.
Adopting smart retirement strategies is the key to living your golden years the way you truly want to. Free from the anxiety of money stress. And free to do all those things you’ve always dreamed of doing. Now’s your time. Enjoy it.
About Brian M. Reiser
Brian M. Reiser has a Bachelor of Science degree in Management with a concentration in finance from the School of Management at Binghamton University.
He also holds a B.A. in philosophy from Columbia University and an M.A. in philosophy from the University of South Florida.
His primary interests at Investment U include personal finance, debt, tech stocks and more.