Where is the safest place to put your retirement money?
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.
- Bonds.
- Dividend stocks.
- Utility stocks.
- Fixed annuities.
- Bank certificates of deposit.
- High-yield savings accounts.
- Balanced portfolio.
- IRA plans.
- Solo 401(k) plan.
- Traditional pensions.
- Guaranteed income annuities (GIAs)
- The Federal Thrift Savings Plan.
- Cash-balance plans.
- Cash-value life insurance plan.
- Nonqualified deferred compensation plans (NQDC)
A checking account at a federally insured bank or credit union is a safe spot for money that's earmarked for bills and everyday spending.
Bonds, certificates of deposit, and annuities offer guaranteed returns on investment supported by the government and individual insurance companies, so the products are considered safe investments which are beneficial for people seeking consistent income in retirement.
Treasuries. Generally considered one of the safest assets on the planet, U.S. Treasuries are bonds issued directly by the U.S. government. Investors should keep in mind that the value of Treasuries can fluctuate while they are being held to maturity. Interest income is also exempt from state and local taxes.
- Charles Schwab.
- Wealthfront.
- E-Trade.
- Fidelity Investments.
- Betterment.
- Firstrade.
- Interactive Brokers.
- Merrill Edge.
As a result, an oft-stated rule of thumb suggests workers can base their retirement on a percentage of their current income. “Seventy to 80% of pre-retirement income is good to shoot for,” said Ben Bakkum, senior investment strategist with New York City financial firm Betterment, in an email.
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.
- High-yield savings accounts.
- Money market funds.
- Short-term certificates of deposit.
- Series I savings bonds.
- Treasury bills, notes, bonds and TIPS.
- Corporate bonds.
- Dividend-paying stocks.
- Preferred stocks.
Where do millionaires keep their money?
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.
There is no restriction to how much of that you can possess or carry. There is however, a legal limit as $10,000 in cash when flying internationally.
| Bank | Forbes Advisor Rating | Learn More |
|---|---|---|
| Chase Bank | 5.0 | Learn More Read Our Full Review |
| Bank of America | 4.2 | |
| Wells Fargo Bank | 4.0 | Learn More Read Our Full Review |
| Citi® | 4.0 |
The key to saving money is to: focus, make saving a habit and a priority, and discipline. Your income is not a key to saving money. Compound interest is interest paid on interest previously earned.
If you retire with no money, you'll have to consider ways to create income to pay your living expenses. That might include applying for Social Security retirement benefits, getting a reverse mortgage if you own a home, or starting a side hustle or part-time job to generate a steady paycheck.
Having several streams of income can help you achieve greater financial stability in retirement. They might include a pension from a former employer, income from your retirement accounts and other investments, Social Security benefits, and possibly a paycheck from part- or full-time work.
- Key retirement planning statistics.
- Long-term investing.
- Match your retirement plan with your time horizon.
- Make sure your portfolio is set up for success.
- Additional retirement investing strategies and planning resources.
- Protecting Your 401(k) From a Stock Market Crash.
- Don't Panic and Withdraw Your Money Too Early.
- Diversify Your Portfolio.
- Rebalance Your Portfolio.
- Keep Some Cash on Hand.
- Continue Contributing to Your 401(k) and Other Retirement Accounts.
- How to Respond to a Recession.
- Continue contributing to your 401(k) plan. ...
- Maintain a well-diversified portfolio. ...
- Consider investing in defensive stocks. ...
- Opt for value over growth stocks.
Safe Withdrawal Rate
Using our portfolio of $400,000 and the 4% withdrawal rate, you could withdraw $16,000 annually from your retirement accounts and expect your money to last for at least 30 years. If, say, your Social Security checks are $2,000 monthly, you'd have a combined annual income in retirement of $40,000.
What is the average Social Security check?
Social Security offers a monthly benefit check to many kinds of recipients. As of December 2023, the average check is $1,767.03, according to the Social Security Administration – but that amount can differ drastically depending on the type of recipient. In fact, retirees typically make more than the overall average.
| State | Average Retirement Income |
|---|---|
| California | $34,737 |
| Colorado | $32,379 |
| Connecticut | $32,052 |
| Delaware | $31,283 |
With the $1,000 per month rule, if you plan to withdraw 5% of your savings each year, you'll need at least $240,000 in savings. If you aim to take out $2,000 every month at a withdrawal rate of 5%, you'll need to set aside $480,000. For $3,000, you would aim to save $720,000.
Living on $2,000 per month is doable, but you won't be able to live just anywhere. This is important because at the time of writing the average Social Security benefit paid is $1,701 per month.
$300,000 can last for roughly 26 years if your average monthly spend is around $1,600. Social Security benefits help bolster your retirement income and make retiring on $300k even more accessible. It's often recommended to have 10-12 times your current income in savings by the time you retire.
