Now that you’ve worked hard over the years, gradually allocating a portion of your income to your retirement plan, it’s time to think about what you’ll do financially during your retirement years. 

Even though your retirement account will be sizable at this point, with ever-changing economic forces, it’s more likely that your retirement payout alone will not last you the remainder of your life. For this reason, it’s a smart idea to continue investing in ways that will provide you a livable income as your money continues to grow.

Depending on your risk tolerance, there are several ways to continue growing your money after retirement, pay your day-to-day living expenses, and fund entertainment and vacations. 

Retirement Income Funds

Retirement income funds are similar to mutual funds in that they are actively managed investment portfolios. Typically, professional financial brokers will manage your retirement income fund in a way that yields a steady income while conservatively moderating your assets. 

Payouts are carefully modulated, but not guaranteed. As the economy fluctuates, so does your income from these funds. Retired investors can expect anywhere from 4-14% in annual payouts from retirement income funds. Since these managed portfolios contain a diverse set of assets, retirement income funds are a great all-in-one solution for investors that want a steady income without the work. 

Immediate Annuities

Another way to receive regular income from your nest egg is to invest in an immediate annuity. These require you to forfeit capital for a guaranteed monthly income for the rest of your life. You can think of them as a type of insurance policy.

The advantages of immediate annuities include simplicity, tax advantages, and the fact that you can start receiving your payments immediately. However, you won’t be able to withdraw the capital that you invested in your immediate annuity.

Immediate annuities can be fixed or variable. Fixed annuities are predetermined monthly payments for the duration of the contract, while variable annuities will adjust the payments depending on inflation.

Bonds

One of the safest ways to invest your retirement cash is in bonds. As government and corporate entities borrow money, they need to pay their loans back with interest. Bonds are a way for everyday investors to capitalize on those interest payments. 

Interest paid to bondholders can act as a type of income for retirees. And when the bonds mature, bondholders receive another lump sum of that principle. 

Real Estate

For those willing to put in some work and take on substantial risk, renting out real estate properties could become an excellent source of additional income.

By becoming a landlord, you can use tenant rent payments to pay for the costs of the property and still have some money left over to go into your pockets.  

Much effort will be needed to ensure your real estate investment works for you. Study the ins-and-outs of real estate investing before going into it.

But if the work involved in maintaining a rental property isn’t for you, then consider a Real Estate Investment Trust (REIT). Once again, this is an investment strategy that works similarly to traditional mutual funds. Instead of containing stocks and bonds, however, REITs are comprised of real estate properties that are curated by professional brokers.

Stocks and Dividends

Stocks are arguably the most widely used form of investment. Holding shares of stable companies is one of the surest ways to increase capital over time. While stocks are a compelling way to reinvest retirement money, they also come with higher risk, especially for older people who don’t have as much time to endure economic fluctuations. 

Investing in stocks with consistent dividend payouts is a slightly safer way to invest in stocks. Dividends are essentially the extra profits that companies are squeezing out of their revenue; paid to shareholders. Portfolios containing a sizable amount of dividend stocks could provide a decent source of passive income during your retirement.   

The bottom line

To optimally invest after retirement, ensure a diverse portfolio. This means choosing multiple ways to invest your money, depending on the size of your nest egg. An astute investor will probably choose more than one of the above options for post-retirement investing. 

Making sure your investment portfolio is diverse can be mentally tiring, though. Safer investment options will involve consulting with a financial advisor and potentially choosing a single retirement income fund that will be managed by a professional broker. Or, for a completely hands-off approach, forfeit your money to an immediate annuity account and receive a guaranteed monthly income.