Investing in over 55 safe

Running the numbers can help with deciding if retiring at 55 is a realistic goal. A financial advisor can also help you get a realistic estimate of when you may be prepared to retire. Can I Actually Retire at 55? In fact, some members of the FIRE financial independence, retire early movement aim to retire as early as And some seniors may choose to delay retirement to their 70s or simply keep working indefinitely.

Social Security retirement benefits can be an important part of your financial puzzle. These benefits are designed to provide monthly income in addition to any income you have from qualified retirement accounts, taxable investment accounts, annuities or other sources. However, you unfortunately cannot begin receiving Social Security retirement benefits at The earliest age you can begin drawing Social Security retirement benefits is Taking Social Security benefits prior to reaching your normal retirement age results in a reduction of your benefit amount.

Your benefits can also be reduced if you start taking them at age 62 but are still working in some capacity. So, say you retire at 55 from your full-time job but you want to do some consulting work on the side. Once you turn 62, you could claim Social Security retirement benefits but your earnings from consulting work could affect how much you collect.

The flip side to Social Security is that you can be rewarded with a larger benefit amount by waiting to claim them. Saving money in a k or individual retirement account can help to fund your early retirement goals. But you may run into a snag when trying to take money from those accounts before age This IRS rule says that if you get fired, laid off or quit your job in the year that you turn 55 you can withdraw money from your current k or b without a penalty. The only way to work around this would be rolling your old k or b into your current one before you retire.

With a Roth IRA, you can always withdraw your original contributions tax- and penalty-free. But to do that, the account must have been open for at least five years beforehand. An online brokerage account could be a good place to start. Similarly, when the economy cools, investors are less confident. They take money out of stocks—which now seem too risky—and seek the safe haven of the bond market. Generally speaking, stocks and bonds are negatively correlated but during the financial crisis , that wasn't the case.

Still, for the most part, bonds help level out stock market volatility Here's why that's important. If you put all your money into one asset class i. Investing in a variety of asset classes provides diversification in your portfolio. That diversification keeps you from losing all your money if one asset class goes south.

How you arrange the assets in your portfolio is called asset allocation. Depending on your age and the number of years you have until you retire, the recommended asset allocation looks very different. Asset Allocation by Age Here's a look at asset allocation through life's various stages.

Of course, these are general recommendations that can't take into consideration your specific circumstances or risk profile. Some investors are comfortable with a more aggressive investment approach, while others value stability above all else—or have life situations that call for extra caution, such as a child with disabilities. A trusted financial advisor can help you figure out your risk profile.

Alternatively, many online brokers have risk profile "calculators" and questionnaires that can determine if your investing style is conservative or aggressive—or somewhere in between. At any age, you should first gather at least six to 12 months' worth of living expenses in a readily accessible place, such as a savings account, money market account, or liquid CD. Some k plans offer matching contributions from the employer, which means they'll contribute up to a certain percentage of your salary to your k.

You have the biggest advantage over everyone by investing right now: time. Because of compound interest , what you invest during this decade has the greatest possible growth. Since you have more time to absorb changes in the market, you can focus on more aggressive growth stocks and avoid slow-growing assets like bonds. You still have 30 to 40 active working years left, so this is when you need to maximize that contribution.

Make sure to put in enough to get the company match in your k and consider maxing it out if you can. And max out your IRAs, too, while you're at it. You can still afford some risk, but it may be time to start adding bonds to the mix to have some safety.

If you're already on track, use this time to do serious portfolio building.

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However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money. The investing information provided on this page is for educational purposes only. NerdWallet does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.

Once you reach the big , blowing out birthday candles can feel less like a celebration and more like fanning the flames on a pyre of financial obligations. This is the decade when the costs of kids, aging parents, cars and homes converge, and questions about retirement begin looming large. For example, according to T.

Rowe Price, by age 50 an individual should have six times their salary saved. But an even better check-in for midlife investors is to run a few different saving and investing scenarios through a good retirement calculator. The exercise will provide more accurate results than when you were younger and projected retirement expenses were a bit fuzzier.

Am I on track financially? Our investment strategy road map can guide your investing journey. Learn more 1. Make up for lost time The older, wiser and hopefully wealthier you these are your peak earning years, after all can overcome past savings shortcomings via catch-up contributions to tax-favored retirement accounts. Potential risks: Some seniors might be vulnerable to fraud from people claiming to be deposit brokers. CDs are not intended for people who want to have access to their funds.

Essentially, you can withdraw the money you put in and the interest it earned only after the CD has matured. Benefits: In general, CDs tend to have zero risk and higher interest rates than traditional savings accounts. The rates are fixed, unlike APYs for other accounts. FYI: To learn about how these investment options can play into an inheritance, read my guide to living wills. For example, Treasury bills are good short-term investment options that range from a few days to several weeks, according to Treasury Direct.

Also, TIPS pay interest every six months over the span of five or 10 to 30 years. If you go with Treasury bonds, the maturity rate is longer — up to 30 years, with interest paid every six months. Treasury bills, notes, and bonds Why invest: Do you need an alternative source of steady income?

For example, as an investor, you use the principal, or initial investment, to purchase bonds or other-short term investments that will mature over time. Also, with Treasury bonds, keep in mind that you might get a lower rate of return compared to other options. Dividend-paying stocks Well-established companies will usually pay dividends to shareholders.

People who would like to see a more consistent or steady income source should consider dividend-paying stocks as a safer investment option. Why invest: For those who enjoy having a security blanket over their investments, dividend-paying stocks might be an option. Companies will pay a decent amount of dividends that lead to a more consistent flow of income for seniors.

In general, dividend-paying stocks are less risky because shareholders will still receive dividends. Well-established companies that pay dividends offer stability and a reliable and constant flow of income for shareholders. Did You Know: To protect your assets, you should guard your personal information. Read my guide to senior citizen identity theft to learn more.

Money market accounts Money market accounts essentially operate as a type of savings account, except they may offer higher interest rates and incentives the more money you deposit. You can also easily withdraw funds immediately for emergencies. Accessibility is the main reason why many retirees might consider money market accounts in tandem with savings accounts.

Potential risks: While opening a money market account might be enticing, you should consider the fact that the APY might be similar to the rate offered by a traditional savings account. Additionally, there will usually be a minimum balance that must be maintained. Keep in mind that there may also be monthly fees or restrictions on how much you can withdraw, depending on the institution.

Benefits: With money market accounts, you can easily access your money and have the reassurance of it being FDIC-insured. Fixed annuities Fixed annuities fall under the safe investments category for seniors. They are contracts, or financial products, that offer guaranteed returns for a period of time. Fixed Annuities Potential risks: Unfortunately, if you withdraw funds too early, you may be penalized.

Also, there is something called a variable annuity, in contrast to a fixed annuity, which involves taking greater risks with your investment. Other drawbacks include high fees and a lack of liquidity. Benefits: Annuities are complex, so be sure to speak with a financial advisor to learn more about them. In terms of gains, this safe investment choice provides guaranteed returns and retirement income for peace of mind.