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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FAQs
These seven low-risk but potentially high-return investment options can get the job done:
- Money market funds.
- Dividend stocks.
- Bank certificates of deposit.
- Annuities.
- Bond funds.
- High-yield savings accounts.
- 60/40 mix of stocks and bonds.
Money market accounts are worth considering as well; they're FDIC-insured, and combine features of checking and savings accounts. U.S. government securities—such as Treasury notes, bills, and bonds—have historically been considered extremely safe because the U.S. government has never defaulted on its debt.
Where should retirees put their cash? ›
While stocks offer significant growth potential, bonds are widely regarded as a safer investment, making them an excellent choice for retirees looking to preserve capital while still generating income.
Where is the best place to keep your retirement money? ›
Low-risk investments and savings options include fixed annuities, savings accounts, CDs, treasury securities, and money market accounts. Of these, fixed annuities usually provide the best interest rates. Retirement can feel scary because the future is uncertain.
What is the $1000 a month rule for retirement? ›
One example is the $1,000/month rule. Created by Wes Moss, a Certified Financial Planner, this strategy helps individuals visualize how much savings they should have in retirement. According to Moss, you should plan to have $240,000 saved for every $1,000 of disposable income in retirement.
Where is the safest place to put $100,000? ›
Park your cash in an interest-bearing savings account
If you're still deciding how to invest your money, be sure it's stashed somewhere safe, like a certificate of deposit (CD). Deposits held at FDIC-member banks and NCUA-member credit unions are insured up to $250,000 per depositor, per financial institution.
Where is the safest place to put money if banks fail? ›
Their options include traditional means such as money market funds or short-duration Treasury bills and more volatile stores of value, such as gold. Some investors have even gone so far as to remove all counterparty risk from their portfolios by investing in cryptocurrencies.
Where do millionaires keep their money safe? ›
Cash equivalents are financial instruments that are almost as liquid as cash and are popular investments for millionaires. Examples of cash equivalents are money market mutual funds, certificates of deposit, commercial paper and Treasury bills. Some millionaires keep their cash in Treasury bills.
Where do millionaires keep their money in banks? ›
Millionaires also have zero-balance accounts with private banks. They leave their money in cash and cash equivalents and they write checks on their zero-balance account. At the end of the business day, the private bank, as custodian of their various accounts, sells off enough liquid assets to settle up for that day.
What is a good monthly retirement income? ›
Many retirees fall far short of that amount, but their savings may be supplemented with other forms of income. According to data from the BLS, average 2022 incomes after taxes were as follows for older households: 65-74 years: $63,187 per year or $5,266 per month. 75 and older: $47,928 per year or $3,994 per month.
If you are already running out of money in retirement, consider part-time work, reverse mortgages, or financial assistance from family members or government programs.
How long will $400,000 last in retirement? ›
Using the standard 4% withdrawal rule, this would let us pull $16,000 per year from the retirement account. Combined with Social Security, this would give you almost $32,000 per year in pre-tax income. This isn't much to live on and it would only last you about 25 years before your portfolio runs out.
What is the safest place to put your 401k? ›
Bond funds, money market funds, index funds, stable value funds, and target-date funds are lower-risk options for your 401(k).
Where is the best place to put 401k after retirement? ›
Best online brokers for a 401(k) rollover:
- Charles Schwab.
- Wealthfront.
- E-Trade.
- Fidelity Investments.
- Betterment.
- Firstrade.
- Interactive Brokers.
- Merrill Edge.
Summary: Best IRA Accounts & Their Ratings
| Company | Forbes Advisor Rating | View More |
|---|
| Charles Schwab | 4.3 | View More |
| Betterment | 4.8 | Learn More On Betterment's Secure Website |
| Vanguard Digital Advisor | 4.8 | Learn More On Vanguard's Website |
| SoFi Automated Investing | 4.7 | Learn More On Sofi's Secure Website |
2 more rowsMay 1, 2024
The concept of the "safest investment" can vary depending on individual perspectives and economic contexts, but generally, cash and government bonds, particularly U.S. Treasury securities, are often considered among the safest investment options available. This is because there is minimal risk of loss.
Where should I put my money instead of a 401k? ›
Good alternatives include traditional and Roth IRAs and health savings accounts (HSAs). A non-retirement investment account can offer higher earnings but your risk may be higher. Investment accounts don't typically come with the same tax advantages as retirement accounts.
Where is the safest place to roll over 401k? ›
Best online brokers for a 401(k) rollover:
- Charles Schwab.
- Wealthfront.
- E-Trade.
- Fidelity Investments.
- Betterment.
- Firstrade.
- Interactive Brokers.
- Merrill Edge.
Roth IRA matchup, a Roth IRA can be a better choice than a 401(k) retirement plan, as it typically offers more investment options and greater tax benefits. It may be especially useful if you think you'll be in a higher tax bracket later on.
