Are Your Safe Investments Actually That Safe?

The “golden years” were once seen as a time when the lure of retirement beckons, the daily work grind wanes, and plans are made for living the dream in a state of well-earned financial bliss.

But the golden years, unfortunately, have increasingly become more about accumulating enough green to finance increased longevity. People are living longer, that’s a fact. Today, the average life expectancy in the U.S. hovers around 79 years of age; about thirty-five years ago, life expectancy was under 75. Government data indicates that senior citizens spend about $50,000 per year, on average. Given increased longevity and the higher cost of living expenses, investments are becoming more important than ever when it comes to retirees paying their bills and financing recreation.

Less Return On Investment Than In The Past

Individuals nearing retirement tend to put their money into conservative options such as CDs, money market accounts, even bonds. Truth is, none of these options pay like they did in years past. For example, a 10-year Treasury note in 1981 yielded as much as 15.84%. By the end of the decade, the rate had fallen to 9.5%; as of 2021, it hit a low of 1.5%, which is roughly the same rate as a standard savings account.

The good news? Other options exist if you’re looking for reasonable returns without much risk.

Dividend-paying Stocks: Little Risk, Reasonable Gain

You can get dividend-paying stocks either as individual stocks or through dividend funds. Companies that offer this type of stock will distribute a portion of the company’s profits to shareholders, usually once per quarter. While there is some risk when it comes to investing in a stock, you can also snag a decent payoff if the price of the stock goes up.

Annuities: Funds You Can Count On

Annuities, generally sold by insurance companies or financial institutions, are designed to address the prospect of individuals outliving their savings in retirement. After you reach the annuity payout phase, you’ll begin receiving a steady stream of income for either a predetermined period of time or your entire life. It’s important to note that annuities come with multiple fees, and that you won’t be able to access funds early on without paying a penalty.

Real Estate Investment Trusts:  Real Opportunity

Real estate investment trusts (REITs) offer an opportunity to crowdfund the purchase of residential homes or commercial properties. For as little as $500, you could start acquiring properties and building a real estate portfolio that offers profits without the pitfalls of being a directly involved, hands-on landlord.

Farmland: Reaping The Rewards

Research shows that investing in farmland can offer better returns than gold, bonds, and even the stock market. New farmland investment platforms allow you to join with other investors and pool your funds to buy stakes in individual farms – without any of the responsibility of running it yourself. Once you invest, you’ll receive a portion of the leasing fees and crop sales, all from an asset that has intrinsic value:  Even if the economy tanks, people still need to eat, crops still need to be grown, and farms will continue to function.

Whole Life Insurance: Peace Of Mind, Ensured

With whole life insurance, you’ll be securing lifelong coverage for your family that also offers a ‘cash value.’ Part of the premiums you pay go toward the cash value component, which is invested and grows at a steady, guaranteed rate. Any earnings on this investment are tax-deferred. You can borrow against the cash value of whole life insurance and use the money as a source of income or as a means of paying policy premiums. You can even trade it for a more significant death benefit for your family. If you opt for a ‘participating’ policy, you can also share in the company’s profits, which will be awarded to you as dividends.