No matter how near or far you may be from retirement, it’s never too early to make decisions about where to safely stash retirement savings. Money experts suggest seven low-risk options designed to keep retirement funds safe:
- Employer-sponsored plans – Often administered by third-party providers, these plans guarantee certain protections for your money, making them a great place to start.
- Individual Retirement Accounts (IRAs) – IRAs are personal savings vehicles available as traditional or Roth IRAs. Because they offer different tax benefits, they should be considered as a complement to your employer-sponsored plan for some of your retirement savings. Traditional IRAs are funded with pre-tax contributions, so you can deduct them from your taxes for the year. Roth IRAs are funded with after-tax contributions and offer tax-free growth on your investments. As both types have their own benefits and drawbacks, check with your accountant before deciding which is best for you.
- U.S. Treasury securities – When it comes to savings, U.S. Treasury securities are considered the safest investment option, as they are backed by the full faith and credit of the U.S government. They are available as savings bonds, treasury notes, treasury bills and more.
- FDIC-insured High Yield Savings Account – These accounts offer FDIC insurance up to $250,000 per depositor, and often come with competitive interest rates, allowing your investments to grow over time. They are easy to access and are one of the safest places for your money.
- Fixed annuities – Annuities provide regular payments in exchange for an upfront lump sum While investing in annuities carries some risk, they do provide a guaranteed rate of return, so your savings are not subject to market volatility.
- Money Market Accounts – These accounts are relatively low-risk investments that offer higher interest rates than regular savings accounts. They are considered safe because they are FDIC-insured up to $250,000.
- Low-Cost Index Funds – Index funds are a type of mutual fund that tracks a specific market index, such as the S&P 500. They offer a diversified portfolio of stocks or bonds, which helps to reduce risk. They have low fees and expenses, and historically, over the long term, they have provided solid returns, making them a good way to build wealth for retirement.
