Learning Resources

Your Ultimate Guide to Investing After Retirement

12 Nov 2021

After Retirement Investment | VI
(c) Sadie Xiao

Retiring from your job does not mean an automatic stop to your income. Well, you can choose to refrain from ways to earn money or you can choose to invest after retirement.

A 2018 study conducted by Schroders found that about 70% of investors around the world, the majority of them in Asia, plan to continue investing in their post-retirement years. Moreover, this group of respondents reveal they’ll use approximately 13% of their retirement savings to invest.

Since you’re reading this article now, we’ll assume you wish to continue investing after your retirement as well. And you’re right to do so.

Why invest after retirement

People invest after retirement for several reasons.

First, you cannot afford to run out of your retirement savings. What if your savings can only last you 15 or 20 years of retirement? What will then happen to you in the next 10 or 15 years?

People are now living longer. Our life expectancy now ranges from 80 to 85 years old. Imagine not being able to cover the long years of your life without having enough to enjoy your silver years. It’ll just defeat the purpose of retirement.

Second, your retirement savings might not be enough to overcome the rising inflation year by year. Granted that you have enough monthly payout from your retirement plan or pension plan, your expenses will go up annually due to inflation.

With inflation, the value of your money erodes. Your $3,000 monthly pension when you’re 54 years old won’t be able to pay for the same goods or services when you’re 60.

Third, your lifestyle will change after retirement. This means your expenses will also change. Plus, think about the medical bills or even caregiving bills you need to shoulder.

We’re not saying you should just invest everything you have in your retirement savings. There are, of course, considerations you need to think through.

How to start post-retirement investing

If you’ve decided to continue investing after retirement, you need to make sure you cover these two things first.

One, set aside an appropriate amount of cash on hand. This is for your necessities, such as food and mortgage, as well as for your leisure because you would want to enjoy your retirement and earn money simultaneously, wouldn’t you?

But don’t just save your cash for a month of expenditures. Make sure you have enough funds for three to six months. Investing has risks, as all things in our lives have, so you can’t risk putting all your money into investing (particularly if it’s not a suitable option for you as a retiree).

Hence, we come to the second pre-requisite of your after-retirement investment – choosing which investment option best suits you. While there are a lot of investment vehicles you can invest in, the more important question is which one is parallel with your goals and your profile.

As a retiree, you would want to invest in less risky investments. You cannot afford to outlive your retirement savings and you might not have the chance to get the money back. Your goal must be to have more money to last you throughout your retirement years, however long they might be. Likewise, it’s better to choose highly liquid investments or those you can easily withdraw whenever you need the funds.

Different investment vehicles for retirees

What are the available options you can consider investing in?

1. Bonds

Bonds are a popular investment option for retirees as they are considered less risky. Bonds are not highly influenced by volatility, hence, seen as lower-risk investments as compared to stocks. 

You can also consider government bonds, such as SSBs (Singapore Savings Bonds) if you’re from Singapore. To align your expectations, however, do note that low-risk investments usually have low returns. So don’t expect high returns, but you can expect your money to grow steadily albeit slowly.

2. Stocks

If you want higher returns, you can consider investing in stocks. Keep in mind that the same principle applies; thus, stocks are often said to be at higher risk as well. But you’re wrong if you think a stock investment is only for the young.

Retirees like yourself can also benefit from the stock market by picking the right stocks or those with high growth potential, hence, can give you good returns over time. Whereas younger investors can pick tech stocks, you might be better off choosing dividend stocks so you get an additional payout every month on top of your pension payout. Of course, the key is learning which stocks to invest in.

If you’re interested, VI offers a free two-hour online masterclass that will teach retirees like you a safe and proven method to invest in the stock market. Join the masterclass through this link.

3. Real Estate

You already know this, for sure. Real estate is another popular investment choice after retirement. It’s either you already have an existing property you’ve bought before you retired or you currently have enough cash to buy a property that you could rent out.

This investment is sure to give you a steady monthly income in the form of rental payments. Of course, there are risks involved as well, such as the location, tenants, rental policies, and even a housing bubble.

Whatever you choose to invest in after your retirement will have its risks. It’s in knowing these risks, however, that you would be well-informed about your investment.

So think it through and don’t just rely on what your friends tell you to do. After all, we're talking about your remaining years to enjoy life.

Happy retirement! 



DISCLAIMER

No income guarantee or promises of any type are being made in this article. Know that your results will vary due to circumstances that are outside of our control. All forms of investments carry risks, including the risk of losing all of the invested amount. Such activities may not be suitable for everyone. The reader, thus, agrees that the author and the company are not responsible for the success or failure of readers’ investment and business decisions relating to any information provided herewith.