Investment After Retirement: 9 Tips to Grow Your Wealth

Retirement is often seen as the golden phase of life, where you finally get to enjoy the fruits of your labor. Still, managing your finances during this time is crucial to ensure your golden years remain stress-free. 

No matter what age you retire, investing after retirement can also be essential for maintaining and even growing your wealth.

Whether you're looking to preserve your assets, generate additional income, or just stay ahead of inflation, we spoke with experts about  after-retirement investing strategies that can help.

Why investing after retirement is important

“Investing after retirement is crucial,” says Josh Katz, CPA and retiree finance expert, and founder of Universal Tax Professionals. “Retirees often face unique financial challenges like managing currency fluctuations, rising healthcare costs, and maintaining long-term purchasing power.”

It's important for several key reasons:

• Combating inflation: “Inflation and the increasing cost of living, even in countries with a lower cost of living, can erode your savings over time if you don’t continue to invest strategically,” Katz says. By investing, you can help ensure your savings continue to grow and keep up with rising costs, especially important during retirement when you may be living on a fixed income. 

• Extending your savings: Retirement can last several decades, and relying solely on savings may not be enough. Investing allows you to generate additional income, helping your savings last longer and reducing the risk of outliving your money. 

• Meeting unexpected expenses: Life can be unpredictable, and unexpected expenses such as medical bills, home repairs, or supporting family members can arise. Having investments after retirement that continue to grow can provide a financial cushion to handle these unexpected costs.

• Maintaining your standard of living: Many retirees want to keep their pre-retirement lifestyle, whether that involves travel, hobbies, or simply enjoying life. Investing can help ensure you have the financial resources to continue living comfortably.

• Providing a legacy: For those who wish to leave something behind for their family or a charitable cause, investing can help grow your assets, ensuring there is something left to pass on.

It’s even more important for women because…

Investing after retirement is vital for everyone, but it holds particular significance for women “due to the longer life expectancy and potential gaps in retirement savings,” says Lissa Poirot, an award-winning journalist and editor with an emphasis on finance and Head of Content of Joy Wallet’s, a publisher dedicated to bridging the global financial literacy gap and making financial education accessible to everyone.

“For many women, retirement savings need to stretch further due to a longer lifespan,” she says. “Investing can help grow those savings beyond what they might accumulate through pensions or social security alone.”

Women are also more likely to take career breaks for caregiving, “which can result in lower lifetime earnings and, consequently, smaller retirement savings,” says Daniel Morris, founder of Senior Living Interviews.

Options for investment after retirement

How to invest after retirement? Here are some options that retirees might consider:

Dividend-paying stocks

One of the best investments after retirement, these stocks can provide a steady income stream through dividends while also offering the potential for capital appreciation. Companies that have a history of paying consistent dividends are usually more stable and less risky than others.

Bonds

Wondering what investment is appropriate for retirees? Bonds, especially government and municipal bonds, are a popular choice for retirees because they offer regular interest payments and are generally considered safer than stocks. Bond funds or ETFs (Exchange-Traded Funds) can also provide diversification across different types of bonds.

Real estate investment trusts (REITs)

After retirement, where to invest money? REITs allow you to invest in real estate without owning property. They can provide a steady income through dividends, as they are required to distribute most of their taxable income to shareholders.

Annuities

Annuities can provide a guaranteed income stream for life or a set period. There are different types of annuities, such as fixed and variable, so it’s important to understand which one suits your needs best.

Certificates of deposit (CDs)

CDs are low-risk investments that offer a fixed interest rate for a specific term. While the returns may not be as high as other options, they provide security and are insured by the FDIC.

Mutual funds and ETFs

These funds pool money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other assets. They offer diversification and professional management, which can be beneficial for retirees.

High-yield savings accounts

While not an investment in the traditional sense, high-yield savings accounts offer a safe place to store cash while earning interest. They’re ideal for short-term needs or as an emergency fund.

Peer-to-peer lending

This involves lending money to individuals or small businesses through online platforms in exchange for interest payments. While it carries more risk than traditional investments, it can offer higher returns and be one of the best income streams in retirement.

“Allocating funds across a mix of asset classes can help manage risk while allowing growth,” Katz says. “Adding Bitcoin or other cryptocurrencies into the mix may also be worth considering, but they come with higher volatility, so it’s best to keep them as a small percentage of a broader portfolio.”

9 practical tips for doing it right

Investing after retirement requires careful planning and a clear understanding of your financial goals. 

“The first step is to assess your financial situation, including your sources of income—such as Social Security, pensions, and any part-time work—expenses, and existing savings,” Morris says. “This will help you determine how much you can afford to invest and what your financial goals are.”

Here are some practical tips to help you invest wisely after retirement:

1. Assess your risk tolerance 

As you age, your risk tolerance may decrease. It's important to find a balance between preserving your capital and generating income. Diversifying your investments can help spread risk.

2. Consider your time horizon

While retirement may seem like a time to play it safe, it’s essential to consider how long you need your money to last and make an after-retirement investment plan. If you have a longer time horizon—especially if you’ve retired early, for example—you may still benefit from growth-oriented investments. 

“With people living longer, it’s important to plan for 20-30 years of post-retirement life,” says Kris Mullins, Chief Financial Officer at Capital Max, an investment, advisory, and fund placement firm, with a focus on alternative investments. “Ensure your investments can provide income over the long term. Work with a financial advisor to customize your investment plan based on your individual timeline.” 

3. Rebalance your portfolio regularly

“Regularly review and rebalance your portfolio to ensure it aligns with your risk tolerance and financial goals,” Katz says. “This might mean adjusting the mix of assets based on current market conditions or personal needs, such as moving more into liquid investments as you age.”

4. Stay informed

Even after retirement, staying informed about market trends and financial products is essential. This knowledge can help you make better decisions and avoid scams or high-fee investments.

5. Work with a financial advisor

If you’re having problems figuring out how to invest after retirement, a financial advisor can help you create a personalized investment plan that suits your financial goals. They can provide valuable insights, help you manage your risk, and help you avoid costly mistakes.

6. Consider tax implications

Be mindful of the tax implications of your investments. For example, withdrawals from traditional retirement accounts are taxed as income, while long-term capital gains may be taxed at a lower rate.

7. Don’t forget about inflation

Inflation can erode your purchasing power over time. Make sure your investments have the potential to outpace inflation, so your money retains its value.

8. Plan for healthcare costs 

Healthcare expenses can be significant in retirement. Consider investing in assets that can be easily liquidated if needed or explore options like long-term care insurance.

9. Think about your legacy 

If leaving a financial legacy for your family or a charitable cause is important to you, consider how your investments can support that goal. Some investment vehicles, like certain types of trusts, can help with estate planning.

Retirement investment strategies by age

Should you change your approach as you get older? Here are some ideas and recommendations for managing your retirement portfolio by age: 

Ages 55-60

As you approach retirement, focus on preserving your savings while still seeking moderate growth. What should a 55-year-old invest in? Shift towards a more conservative portfolio, with a mix of 50-70% in stocks and 30-50% in bonds or other fixed-income investments. 

Consider increasing allocations to income-generating assets and reviewing your asset allocation to ensure it aligns with your retirement goals and risk tolerance.

Ages 60-65 

In these years, your strategy should continue to emphasize stability and income. The best retirement portfolio for a 60-year-old should aim for 40-60% in stocks and 40-60% in bonds or other fixed-income assets.

Reduce exposure to high-risk investments and focus on investments that offer regular income, such as dividend-paying stocks and bonds. It’s also a good time to start planning for Required Minimum Distributions (RMDs) and other retirement income needs.

Ages 65-70 

At this stage, prioritize income and capital preservation. Consider shifting more into bonds, cash, or income-generating investments, keeping stocks to around 30-50% of your portfolio for growth. 

The best retirement portfolio for a 70-year-old provides enough income to cover living expenses while minimizing risk. Begin withdrawing from retirement accounts as needed and manage your portfolio to accommodate RMDs and other retirement expenses.

Ages 70 and older

Focus on maintaining your standard of living and protecting your assets. Allocate a significant portion of your portfolio to bonds, cash, or annuities, and keep stocks to around 20-40% for growth potential. Ensure your investments provide reliable income and have a strategy for managing withdrawals and RMDs. 

Should a 70-year-old be in the stock market? It can still be a wise choice, depending on individual circumstances. Stocks offer growth potential, which can help combat inflation and extend retirement savings, but it’s crucial to balance this with the need for stability.

FAQs

Should I continue to invest in stocks after retirement? 

Yes, but consider focusing on dividend-paying stocks or funds that provide income while balancing risk. It's essential to assess your risk tolerance and time horizon.

How much of my portfolio should be in bonds? 

The appropriate allocation depends on your financial goals, risk tolerance, and time horizon. “The secret to investing post-retirement is to find a mix of growth and security,” Mullins says. “Expanding your investment portfolio with a variety of assets that generate income, like stocks that pay dividends, bonds, and real estate, can generate a stable income while safeguarding your capital.” 

How to invest 401k after retirement? 

This retirement savings plan offered by many employers in the U.S. allows employees to save and invest a portion of their paycheck before taxes are taken out. You won’t pay taxes on it until you withdraw it in retirement. 

If you’re satisfied with the investment options and fees, you may choose to leave your 401(k) with your employer, where you can take withdrawals as needed. You also can roll over your 401(k) into an IRA or convert your 401(k) to an annuity.

What is a safe withdrawal rate from my retirement investments?

A commonly recommended withdrawal rate is 4% per year, but this may vary depending on your situation. It’s important to regularly review your spending and portfolio performance.

What is a balanced portfolio for a 65 year old?

One of the best retirement portfolios for 65-year-olds typically includes a mix of stocks, bonds, and other investments to provide both growth and income while managing risk. A common approach might be to allocate around 40-60% to stocks for growth potential, with the remaining 40-60% in bonds or other fixed-income securities to provide stability and income. The exact mix depends on individual risk tolerance, income needs, and overall financial goals.

Can I invest in real estate after retirement?

Yes, real estate can be a good investment for retirees, especially through REITs, which offer exposure to real estate without the need to manage properties directly. (Here's a guide to real estate investing for beginners.)

What does “investing in a Roth IRA after retirement” mean?

A Roth IRA (Individual Retirement Account) is a type of savings account that allows you to contribute after-tax dollars, meaning you've already paid taxes on the money you put in.

To make new contributions to a Roth IRA, you must have earned income, such as wages or self-employment income. If you're fully retired and no longer have earned income, you cannot contribute new funds to a Roth IRA. 

However, retirees can still benefit from a Roth IRA by converting funds from other retirement accounts, like a 401(k) or traditional IRA, into a Roth IRA. This process, known as a Roth conversion, does not require earned income, though it may trigger taxes on the converted amount.

For more guidance, read this next: Women and Investing: 8 Strategies to Empower Yourself and Invest With Confidence