The average age of retirement is 63 years in the United States, according to data from the Census Bureau. Despite this, most retirement programs don’t plan for annuities until after the age of 65. Retirees now live longer, and the range keeps increasing, thanks to innovations in healthcare and medical technology.
Saving more today can definitely benefit retirement, but it’s not the only way that you can build up a solid retirement fund. In addition to saving, you should also be looking at investment options, and now is the perfect time to start.
Three Potential Investment Options for Retirement
1: Real Estate
If you have the capital, then investing in a property to be used for rental income will be an option that you should consider. A rental property can provide a long term source of income that will continue into retirement. Keep in mind that owning a rental property will mean that you are responsible for taxes and maintenance. The income available to you will be determined by whether or not you can keep the property occupied. Income will also change depending on average rental prices and the location and condition of your property.
If you’re still some years away from retirement, then owning a rental property could allow you to passively build your retirement fund, and the property could be sold later as it becomes less practical to manage in old age.
Bonds are considered one of the safest forms of long term investment. Church bonds, and government bonds provide income returned over a long period (averaging between five and ten years). Bonds allow for a fixed income which can help to boost immediate savings, and can provide spending income if the bonds are still held during retirement.
Bonds are rated by quality, with high quality bonds offering smaller returns with less risk. High interest rate bonds typically carry a high amount of risk, so it’s important to lean towards the ‘safer’ ones when thinking in the context of retirement income/savings.
3: Dividend Stocks
General stock trading can be an excellent investment, and there are plenty of successful retirees who have built wealth on the stock market. Stock trading does come with a considerable amount of risk, and regular trading is not something that everyone wants to invest time into. One alternative is to buy dividend stocks. These provide a regular income and are considered better for long term investment, as they are not traded for short term gains. Dividend stocks still come with risk as companies can reduce or even eliminate dividends, depending on performance. Diversification across different dividend stocks is the best way to minimize risk. Dividend stocks can also be purchased in funds through a financial brokerage, providing a managed portfolio.
It’s never too early to start thinking about retirement. It can be more comfortable with less stress when you plan early and diversify your investments.
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