As you approach your 70s, it's important to consider how to best invest your money. Many fund managers recommend having a portfolio heavily invested in bonds, as they help preserve capital while generating interest. Certificates of Deposit (CDs) are also a great option, as they offer a higher interest rate than savings accounts, money market accounts, or cash management accounts. The old rule of thumb used to be that you should subtract your age from 100, and that's the percentage of your portfolio you should hold in stocks.
For example, if you're 70 years old, you should keep 30% of your stock portfolio. Retirees may also rely on their own savings for a portion of their retirement income. This includes traditional and Roth IRAs, retirement plans such as 401(k)s, 403(b)s and SIMPLE IRAs, and taxable investment accounts. Collectibles, antiques, and property can also be sources of income.
When it comes to short-term needs such as a new car, home repairs, vacations, or medical care, money market accounts, certificates of deposit and Treasury bills are safe places to store cash. These secure investments provide a small return in the form of interest and return of principal. It's important to remember that sufficient income this year will not extend far enough to pay the bills 10, 20 or more years in the future. Therefore, it's essential to plan ahead and invest wisely for your retirement years.