With Americans living longer than they did in the past, retirement takes on a very different meaning from a financial perspective. There are lots of people who still have 15-20 years of good living to do after they reach the age of retirement and decide to in fact retire.
It’s okay for someone to simply pack it in and rest on their financial laurels as they stand at the point of retirement. The combination of past investments and social security might be all that’s necessary to keep someone feeling comfortable about their financial future. However, twenty years is a long time to have money not working to provide even better financial security.
Retirees certainly have a lot less investment flexibility that someone who is in the middle of their prime earning years. Retirees can’t afford to take risks and they need to stay focused on providing themselves with a steady stream of month cash flow to support their living needs. The good news is there are several investment retirees can make that won’t necessarily infringe on the need for less risk and a steady source of cash flow.
Here are three options worthy of consideration:
Buying a Business
Buying an established income-producing business is not something retirees often consider. However, it’s an investment option with great potential. The key to investing in a business is picking one that’s well-established and one where a majority of the existing employees would be willing to continue employment.
This doesn’t have to be a business in which the retiree wants to intimately involved. They don’t even need to necessarily understand the business industry, though that would be a better way to go. If someone were to find a profitable accounting practice for sale and buy it, that could well be a great investment. The objective would likely be to create a monthly stream of income.
Real estate is still one of the best financial investments an American can make no matter their age. That would certainly apply to retirees. The thing that might be a little different for someone who decides to invest in real estate at an advanced age would be the expectations behind the real estate investment.
In the short-term, there’s always some risk involved in the purchase of real estate. Over longer periods of time, real estate always seems to appreciate in value. With that said, retirees shouldn’t become too fixated on the appreciation. Instead, they should focus on creating a reliable source of monthly cash flow. That points squarely to investing in income-producing real estate. A rental home or small office building would both be reasonable options.
Investing in Precious Metals
Precious metals are generally assumed to mean gold or silver, though platinum might also be worthy of consideration. For a retiree, this would not necessarily be the kind of investment they would make to create an income stream. Instead, this would be a great option to protect against risk.
If a retiree’s financial resources sit in stocks, bonds, and mutual funds, those investments are constantly at risk due to things happening in politics and the economy. If the retiree is expecting to liquidate a small portion of their investment portfolio to create cash flow, they might want to consider protecting the value of that portfolio. Investing in precious metals has long been considered a great way to “hedge” against things that could threaten the value of securities and bonds. As the securities go down, precious metals tend to go up. This is a great option for maintaining a stable overall investment portfolio.