The 4 Safest Places for Retirees to Put Their Money (2024)

FAQs

What is the safest place to put money for retirement? ›

Stocks. The stock market is one of the best investments for income in retirement, regardless of your age or investing goals. And, it's especially beneficial if you're looking for investments after retirement that will help preserve capital and create supplemental income.

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.

Retirement: 70s and 80s

You're likely retired by now—or will be very soon—so it's time to shift your focus from growth to income. Still, that doesn't mean you want to cash out all your stocks. Focus on stocks that provide dividend income and add to your bond holdings.

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.

If you want a safe place to park extra cash that often earns a higher yield than a traditional savings account, consider a money market account. Money market accounts are like savings accounts, but they typically pay more interest and may offer a limited number of checks and debit card transactions per month.

Indeed, a good mix of equities (yes, even at age 70), bonds and cash can help you achieve long-term success, pros say. One rough rule of thumb is that the percentage of your money invested in stocks should equal 110 minus your age, which in your case would be 40%. The rest should be in bonds and cash.

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.

By holding your lump sum in a cash savings account, as opposed to investing it in the stock market, you won't run the risk of your money falling in value just before you need to access it.

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.

The government has no regulations on the amount of money you can legally keep in your house or even the amount of money you can legally own overall. Just, the problem with keeping so much money in one place (likely in the form of cash) — it's very vulnerable to being lost.

According to the data, the average 70-year-old has approximately: $60,000 in transaction accounts (including checking and savings) $127,000 in certificate of deposit (CD) accounts.

The above chart shows that U.S. residents 35 and under have an average of $30,170 in retirement savings; those 35 to 44 have an average $131,950; those 45 to 54 have an average $254,720; those 55 to 64 have an average $408,420; those 65 to 74 have an average $426,070; and those over 70 have an average $357,920.

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.

The safest place to put your retirement funds is in low-risk investments and savings options with guaranteed growth. Low-risk investments and savings options include fixed annuities, savings accounts, CDs, treasury securities, and money market accounts.

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.

A Roth IRA might be the better choice if you:

Want access to a wider range of investment options. Want to be able to withdraw contributions tax- and penalty-free before you turn 59½ without making a plan loan. Have no inclination toward taking RMDs when you turn 70½ or 72.