For most of your career, you focus on growing your retirement savings. Retirement itself is a big adjustment, because at that point, your new goal is making that money last.
This is one of the top concerns for U.S. retirees -- 40% worry that they'll outlive their retirement savings, according to a survey by Clever. And about 1 in 5 (19%) say that their savings have already run out.
How long your savings lasts depends on where you put it. Below, you'll find the safest options that also provide a reasonable return on investment.
1. Treasury bills, notes, and bonds
The federal government raises money by issuing Treasury marketable securities. These securities are backed by the U.S. government, so they're as safe as it gets. They earn a fixed income rate, and rates are high right now. Some of them are earning over 5%.
There are a few popular types of Treasuries:
- Treasury bills (T-bills) are short-term options with terms ranging from four to 52 weeks.
- Treasury notes (T-notes) are mid-term options with terms of two, three, five, seven, and 10 years.
- Treasury bonds (T-bonds) are long-term options with terms of 20 and 30 years.
If you're interested in Treasuries, you can buy them from the U.S. government on the TreasuryDirect website. Many stock brokers also sell Treasuries, so if you have a brokerage account, you may be able to buy them through that.
2. Bond ETFs
There are many organizations that issue bonds to raise money. We've already covered how the federal government does this. Local governments and corporations also issue bonds that you can buy in exchange for a fixed interest rate.
Exchange-traded funds (ETFs) invest your money in a large number of securities. Many of the most popular ETFs invest in stocks, but there are also bond ETFs. These make it easy to invest in bonds, without needing to pick and choose all of them yourself.
Maybe you'd like to invest in Treasuries and some low-risk corporate bonds. Finding and buying all those bonds yourself would be time-consuming. A simpler option would be to invest in a bond ETF that does the work for you.
This is another type of investment you can make through a brokerage account. Quite a few stock brokers offer bond ETFs.
3. CDs
Certificates of deposit (CDs) are accounts available through banks and credit unions. Here's how they work:
- You choose a CD for the length of time you want. Most CD terms range from six months to five years, but there are also longer and shorter options.
- You decide how much money you want to deposit. Some CDs require a minimum deposit amount, while others have no minimum.
- You must leave your money deposited for the entire CD term. If you need to take it out early, you'll pay an early withdrawal penalty. This is normally a portion of the interest you've earned.
In exchange for agreeing to keep your money locked up, your CD will earn a fixed interest rate. You can currently get excellent rates with this type of account, as some earn over 5%.
Before you open a CD with your bank, make sure you compare what it's offering to the best CD rates. You might find a higher-paying option.
4. High-yield savings accounts
Last but not least, there's the trusty savings account. This is a good choice if you want to be able to access your money at any time. With the other options on this list, you can't withdraw your money whenever you want.
But you shouldn't go with just any savings account. To earn more back on your savings, open a high-yield savings account. These are the accounts that have the highest APYs. Most of them are offered by online banks -- they can pay better rates, because they don't have the overhead costs of operating physical branches.
Like CDs, some of the top high-yield savings accounts are offering over 5%. Now, those rates could go down at any time. You're not locking in a rate with a savings account. But you have the flexibility of being able to take out money whenever you want.
Plenty of safe places exist to put your money as a retiree. If you don't mind keeping it locked up for a specific time period, Treasuries and CDs are great ways to get a competitive return. Bond ETFs work well if you want to invest in a variety of bonds. And if you want easy access to your money, go with a high-yield savings account.
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