05 Dec What are good investments for after you retire?

Q. What post-retirement investment options do you recommend? Anything other than high yield savings or CDs?
— Retired

A. It’s a good question.

Investment decisions in retirement depend on your specific situation.

Different investments can have different objectives, and that’s a key here, said Anthony Benante, a chartered financial analyst with Baron Financial Group in Fair Lawn.

“Growth assets can include traditional equity investments, while stability assets tend to include bonds and certificates of deposit, and finally, diversification assets can include natural resources, real estate and non-traditional investment strategies,” he said. “Determining which investments and the best mix of those investments depends on what you want your investments to do for you in retirement.”

Creating a financial plan can help.

To start, review your financial needs in retirement, usually determined by a spending plan or budget, he said. Consider how long your spending plan will be, and do not forget to add in inflation adjustments over time, Benante said.

“Take inventory of your resources, both current and future. Current resources can be things like an emergency fund, banking accounts, investment accounts, retirement accounts, home equity and other assets,” he said. “Future resources can be things like Social Security, pension payments and other retirement income.”

Compare your financial needs with your resources over the life of your plan. Ask yourself if you have an expected surplus of resources or shortfall, considering different market environments and economic cycles.

If your resources are sufficient, the investment choices may be based on your willingness to take risk, he said.

“A conservative person, in this situation and within the context of a diversified portfolio, may choose to include more conservative investments like bonds, certificates of deposit (CDs), Treasury Bonds, Treasury Inflation Protected Securities, etc.” he said. “Someone with higher risk tolerance in this circumstance, again within the context of a diversified portfolio, may consider including more assets with expectations for growth, like equities.”

If your resources do not cover your expected spending needs, you will have to evaluate your spending plan versus the costs and benefits of adding more growth or equity investments to your diversified portfolio, Benante said.

When equity markets are performing well, adding growth assets may help you better achieve your goals, he said, but if investment performance is poor, you may deplete your investment account sooner since you may also be withdrawing to meet your spending goals.

“Ultimately, a diversified mix of investment choices that helps make your money last through retirement, while considering changing economic and market cycles, is the objective,” he said.

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This story was originally published on Dec. 5, 2023.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.