Hi Money Minder,
Hey there, I’m Sally and I recently hit the big 65 milestone and retired. So, I’ve got around $125,000 in my traditional IRA, Roth IRA, and 401K. Good news is, my basic expenses are covered by Social Security, a side hustle, and some rental income. I’m not in a rush to make money right now, but I do want to keep my little nest egg safe and maybe earn some modest returns on the side.
A financial advisor threw an idea at me – buying an annuity that guarantees a 5% return for seven years. What do you think? Any other better options out there, Money Minder?
Catch you later,
Sally
Response from THE MONEY MINDER:
Hello There,
Congratulations on reaching retirement! It’s great to hear that you have a solid financial foundation with various sources of income to cover your basic expenses. When it comes to keeping your nest egg safe while earning modest returns, it’s essential to consider all your options carefully.
While a financial advisor may have suggested purchasing an annuity guaranteed to return 5% for seven years, it’s crucial to assess the pros and cons of this option. An annuity can provide a guaranteed income stream, which can be appealing for some retirees looking for stability. However, it’s also important to understand the fees, restrictions, and potential tax implications associated with annuities.
In addition to annuities, you may want to explore other investment options that offer safety and potential growth. Treasury securities, certificates of deposit (CDs), and high-yield savings accounts are low-risk options that can provide some returns while keeping your money safe. Diversifying your investments across different asset classes can also help mitigate risk and optimize returns over the long term.
Ultimately, the best approach for you will depend on your risk tolerance, financial goals, and time horizon. It may be beneficial to consult with a fee-only financial planner who can provide personalized advice tailored to your specific situation. They can help you create a comprehensive retirement plan that aligns with your objectives and helps you achieve financial security in the years ahead.
All the best from THE MONEY MINDER as you navigate your retirement journey and make informed decisions to protect and grow your wealth.
