Create a Sound Investment Mix for Retirement Income
Investments may need to support many years of living expenses
Financial institutions help educate workers about how to save for retirement. But they give little attention to how to invest while you’re spending during retirement.
Fortunately, some of the same principles apply.
- Diversify with an eye to longevity
- Generate income
- Consider rental properties
- Keep emergency funds in cash
For emergency purposes—and to meet any required minimum distributions—it’s a good idea to set aside at least two years’ worth of living expenses. Keep this money in some form of cash, such as a money market mutual fund or CDs. Having cash in your investment mix may also prevent you from having to sell riskier investments in a down market, buying you some time for the investments to recover.
All of these investment choices are available as mutual funds or exchange-traded funds. These are good options for most retirees, since you benefit from a professional money manager, who chooses which individual securities to buy and sell. Rather than concentrating your investments in a just a few securities, these mutual funds often own dozens and even hundreds of securities, giving you more diversification for your retirement savings.
This material is provided by MyRetirementPaycheck.org, a site from the National Endowment for Financial Education (NEFE) that helps people make sound decisions throughout all of life's financial challenges.
