Investment Options for Retirees

Written by Veselina Dzhingarova 

As you get older, you may want to establish some financial security for you and your family, and you may start to consider the different investment options that are available to you. Entering your retirement period means you will no longer be earning a wage each month and instead you will be on a fixed income.

Many retirees aim to supplement their pensions as well as providing some financial security for their loved ones. This is where investments come in. By investing some money, retirees can create a form of income while also offering a sense of security and peace of mind. However, it can be difficult to know where to invest your money, so here are some of the most popular investment options for retirees and some of the positives and negatives of each.

Rental Properties

Investing in the housing market is a very popular investment for people of all ages. Renting out properties is a safe investment as people always need a place to live, so injecting some money into a decent house to rent out is a logical choice. If you have the money or credit to buy a house, then having tenants to rent it out to will help you pay for it. Not only could investing your money in rental properties give your monthly income a boost, it can also be a great long-term investment as you will one day own the house outright for you or your family to enjoy.

However, there are some negatives about investing money into rental accommodation. It may not be an option available to you if you don’t have the initial funds to buy into a property. Additionally, being a landlord can sometimes be a difficult job if you get non-paying or troublesome tenants. If you are looking for an easy investment option that will require little involvement, then rental properties may not be the best option for you.

Trading

Trading on the stock market is one of the more popular investment options amongst retirees as you can get involved from the comfort of your own home. Platforms such as easyMarkets are offering easy to navigate and accessible platforms that are equipped with the instruments needed to make a success of trading investments.

Traditionally investment trading was considered to only be an option for those with considerable amounts of money to invest, but easyMarkets helps you to invest no matter what your financial circumstance.

Insurance

This may seem like a less obvious form of investment, but by taking out an insurance plan, you are making long term plans for your loved ones. Most insurance policies have different payment options so that it is affordable no matter what your current income, and there will be a considerable payout at the end of the insurance plan.

Interest Bank Accounts

A simpler investment option could be to open an interest-bearing account. This is a more popular option among retirees with savings as you could make money from the interest collected as your money sits in the account.

With these types of bank accounts, you are not risking any of your money and will gain any interest that it creates. However, for this option to be financially worthwhile, it would require a considerable deposit for much interest to be made.

If you do think this investment option would be good for you, then be sure to research some of the best offers at your local bank and shop around for the best interest rates. Deciding where to invest your money is a big decision, but if you research your options carefully and don’t make any impulsive choices, then you can make profitable investments during your retirement.

How Do People Around The World Plan For Retirement?

Written by Sally Perkins

Globally, most governments provide for some form of social security and retirement income. But as human lifespans are increasing by approximately three years every generation, there is a global trend of governments pushing back the age at which retirees can claim social security benefits. With government retirement schemes struggling to accommodate a growing population of retirees who are living longer than ever, the burden of saving for a comfortable and fulfilling retirement is increasingly being passed on to the individual.

The rule of thumb for financial planning is to assume you’ll need about 70 percent of your pre-retirement earnings to maintain your standard of living into retirement. In the United States, Social Security benefits will cover about 40 percent of your income, but unless you can count on some kind of windfall before your mid sixties, that leaves a 30 percent gap that either needs to be funded by a retirement savings account or a drastic lifestyle change.

As you think about your own retirement plans, you might take inspiration from how other workers around the globe prepare themselves for their retirement, financially and otherwise.

Going Dutch

The Netherlands regularly ranks among the best pension systems in the world with benefits from the 3-pillar pension system amounting to about 70 percent of pre-retirement income. There’s many factors that explain why this system is so healthy, but a key piece is that pension funds are compulsory, much like paying into Social Security in the US, only in the Netherlands it generally provides enough to live on comfortably during retirement. But for younger workers who make a good income and want to invest their money more aggressively, this system can make them feel handcuffed as their earnings have to go into the same investment pool with the earnings of older workers for whom risky investments wouldn’t be prudent. And as the lifespan of its population is growing, starting in 2022 the age of retirement will be linked to life expectancy and Dutch workers may need to wait even longer to access their pensions.

An Aging Southeast Asia

Compulsory retirement at a certain age for private sector employees has generally been deemed discriminatory in most nations, but is still in effect in Singapore where, under the Retirement Age Act, employers can mandate retirement starting at age 62, the minimum retirement age nationally. Thailand has a population that is aging faster relative to other Southeast Asian nations, and in spite of statutory severance pay for workers age 60 and over, most Thais have no post-retirement income plan. In Malaysia, workers must fund an Employee’s Provident Fund (EPF), but as with US Social Security, it’s rarely enough to provide a livable income post-retirement and workers are encouraged to find strategies to save for retirement.

UK Workers Push Past Retirement Age

More than 1.4 million over-65s in the UK continue to work at least part time, either because they need to make ends meet or simply because they want to. There’s a certain stigma around retirement, that it’s the end of something rather than the start of an exciting new chapter, which has contributed to many working past retirement age for fear that they will feel useless or lose their edge without work. There’s also less incentive to retire in the UK since workers can continue to work beyond the State Pension age and still receive their State Pension. But according to the Office for National Statistics, health and wellbeing often increase while depression and anxiety fall once workers are no longer burning the candle at both ends. The tradeoff may be well worth it.

Swedish Death Cleaning

One of today’s trending retirement routines comes from Sweden where the act of “death cleaning” helps people prepare for the last act of their life. Honestly less morbid than it sounds, Swedish Death Cleaning is about enjoying the process of going through and paring down your possessions to be able to focus on the really important things. It’s also an act of respect for your loved ones who ultimately end up responsible for your things when you eventually pass away. People in Sweden – and worldwide – have found that downsizing earlier in retirement not only simplifies one’s day to day life, it lifts a psychic weight that makes retirement more carefree. Downsizing – a Global Trend?

Minimalism isn’t unique to Scandinavia, though they seem to have perfected it. Worldwide retirees are finding that by shedding worldly possessions or attachment to a place, they are prepared to travel in retirement or settle in another country where their retirement savings can stretch much further.

While the specifics of retirement schemes may vary from one country to the next, it’s fairly universal that people all over the world must plan ahead to be able to have financial freedom in retirement. Whether that’s saving money on top of pensions or preparing to live a more streamlined and affordable life, foresight is the key.

Why We Don’t Plan for Retirement

Guest Post by Rob Schultz, The Retirement Guy

I recently read an article, “10 Retirement Lessons from a Retired Retirement Pro”, by Richard Quinn that had been published in MarketWatch and HumbleDollar. The article’s opening paragraph struck a chord with me and I share it here.

“For the better part of 40 years, I spent a great deal of time helping thousands of workers prepare for retirement. We ran seminars for workers and spouses on topics like retirement income, insurance, lifestyle, relocation and more. I think it’s fair to say that, if someone took advantage of the programs offered, they would have been well prepared financially and emotionally for retirement. Sadly, relatively few workers utilized all that was available to them—this despite the support and urging of the unions that represented them. I retired in 2010, suffering in part from banging-your-head-against-the-wall syndrome.”

Since I blog and teach about retirement planning in a similar fashion to what Mr. Quinn did, I can empathize with his frustration and head-banging. I have struggled myself with the question of, why the vast majority of people do such a poor job of planning for something that could last for 20-40 years of their life?

I believe the reason is because there are no immediate consequences for not preparing for retirement. For example; if I continually violate the speed limit, chances are I will eventually get a ticket. If I drink and drive, I am going to eventually lose my license. If I don’t pay my utility bills, I am going to have my water, gas & electricity cut off. If I don’t make my car payment, I am going to have my car repossessed. You get the picture. There is a quote which I attribute to my pastor friend, Dix Winston. “You can choose your actions or you can choose your consequences, but you can’t choose both”. Most of our actions in life, have fairly quick consequences. But retirement doesn’t work like that. You can go along for 20, 30, 40 years without planning for your retirement and for the most part nothing terrible happens, until it is too late.

I am frustrated by people that identify a problem, but offer nothing in the way of a solution, so I will propose one. Financial literacy education, beginning in elementary school, is a practical way to address the problem of not only retirement planning, but also; inadequate savings, debt, poor credit, budgeting, etc..

Bob is a retired human resources guy who blogs about retirement planning on his website, http://www.retirementguy.org.