The stock market tumbled this week, then recovered just as quickly. If you’re in or near retirement, watching your portfolio swing like that can be unsettling in a way it never was during your working years.
That’s because you’re no longer just building wealth. You’re protecting it and living off it. A sharp drop at the wrong time can derail years of careful planning if you make a panic decision or are forced to sell during a downturn.
Low-risk investments help you avoid that trap. They won’t make you rich overnight, but they grow steadily and stay accessible when you need them. Here are seven options worth considering.
1. High-yield savings accounts (HYSAs)
You probably already have a savings account. Think of a high-yield savings account as a supercharged version of your traditional savings. These accounts offer significantly higher interest on your deposits, helping your money to grow faster while maintaining liquidity — or keeping your cash accessible when you need it. I use a HYSA to store money I don’t immediately need, such as my emergency savings reserve or vacation funds.
How to invest in a high-yield savings account
Simply compare the best high-yield savings accounts available today, open your account and deposit your money to begin benefiting from the interest it offers. One of my favorite options is SoFi Savings, which can pay hundreds of times more interest than you’d earn in a typical savings account at Chase or Wells Fargo.
Why HYSAs are a low-risk retirement investment
While not technically an investment, HYSAs are among the safest options for storing your money as you save for retirement. The wide majority of HYSAs are protected against bank failure by insurance from the Federal Deposit Insurance Corporation (or the National Credit Union Administration, if with a credit union) for up to $250,000 per depositor, per account.
🔍 How much should you keep in a high-yield savings account?
Financial experts recommend keeping about six months’ worth of living expenses as an emergency fund in a high-yield savings account. This can help you manage unexpected situations such as job loss, medical emergencies or necessary home repairs. Learn more tips to get the most out of your HYSA without oversaving.
Learn more: SoFi vs. Chase: I tried both banks —and here’s why I think they’re better together
2. Certificates of deposits (CDs)
CDs are fixed-rate, time-locked savings accounts that you open by agreeing to leave your deposit untouched for a set period of time that can range from several months to 10 years. In exchange, your bank locks in your rate over the length of your term — with predictable yields that can be higher than your typical savings accounts. That’s why I choose CDs when I know that I won’t need access to my funds for a while.
How to invest in a certificate of deposit?
You can open a CD at most banks and credit unions. The process is similar to opening a bank account — the main difference is that you choose a set initial deposit and term that you can’t change after locking in.
Why CDs a low-risk retirement investment
Like HYSAs, CDs at FDIC-insured banks (or NCUA-insured credit unions) are protected by federal deposit insurance. Plus, locking in your CD’s fixed interest rate is one of the best ways to prepare for Fed rate cuts. However, keep in mind that unless you sign up for a no-penalty CD, you typically can’t access your CD funds before its maturity date without paying an early withdrawal penalty.
Learn more: High-yield savings accounts vs. CDs
3. Money market accounts (MMAs)
Money market accounts are similar to savings accounts with two key differences: MMAs normally offer higher returns and require a larger minimum balance than your typical deposit account.
Your funds in a money market account aren’t locked, which means you can add to or withdraw from your balance whenever you want. And they often come with debit cards and check-writing privileges that open up limited, but useful ways to pay for purchases and bills. That’s why I prefer an MMA over CDs if I’m not sure about locking away my money for a set period of time.
How to invest in a money market account
As with savings accounts and CDs, you can open MMAs at many banks and credit unions online or in person. Take your time to compare available rates and terms — including minimum required balances and common fees that can eat into your profits.
Why MMAs a low-risk retirement investment
Money market accounts are safely protected by FDIC insurance for up to $250,000 per depositor. Even if your bank were to go bankrupt, this safety net means you won’t lose your insured deposit or any interest earned on it.
Learn more: High-yield savings vs. money market account: How to compare rates, fees and more
4. Money market funds (MMFs)
Money market funds are a type of mutual fund investment that pools together money to invest in low-risk assets, which sets them apart from money market accounts (MMAs) that work like savings accounts. Money market funds focus on highly liquid short-term assets, such as bonds issued by the U.S. government, local municipalities and large corporations to raise money.
How to invest in a money market fund
You can buy shares in money market funds through a brokerage account or directly from mutual fund companies. In both cases, you set up an account online or with the help of an account manager that makes it easy to buy and sell shares or manage your investments.
Why MMFs are a low-risk retirement investment
Money market funds invest in stable, short-term debt issued by governments and companies and aim to keep risk low, but they aren’t FDIC-insured. If you hold them at a SIPC-member brokerage, SIPC can protect up to $500,000 in securities (including up to $250,000 in cash) if the brokerage fails, but it doesn’t protect you from investment losses.
Learn more: Best investing platforms: Low-cost options to put your money to work
5. U.S. Treasury bills, notes and bonds
Treasury bills, notes and bonds are assets that the U.S. Department of the Treasury issues to raise money for the U.S. government. When you buy one, you lend money to the U.S. government, and it promises to pay you back with interest. The Treasury calls these assets bills, notes and bonds, depending on the length of terms that can range from four weeks to 30 years.
How to invest in a Treasury bill, note or bond
You can keep things simple and buy Treasury bills, notes and bonds from the government’s TreasuryDirect website. Or use your brokerage account to buy them — which is what I prefer, since it keeps all my investments in one place.
Why Treasury assets a low-risk retirement investment
Because the U.S. government backs Treasury bills, notes and bonds and promises to pay them in full once they mature. This makes them one of the safest investments out there — the U.S. government has never defaulted on any money it owed. Plus, if you invest via a brokerage, you might also receive SIPC coverage.
🔍 Bills vs. notes vs. bonds: What’s the difference?
Treasury bills, Treasury notes and savings bonds are safe interest-bearing products issued and backed by the U.S. government as a way to raise money to cover the way it operates:
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U.S. Treasury bills — also called T-bills — are bought at discount and paid out at maturity on terms of under a year.
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U.S. Treasury notes — also called T-notes — come in increments of $100 over terms of two to 10 years with interest payouts twice a year until the end of your term.
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U.S. savings bonds U.S. savings bonds can be bought with as little as $25 and earn interest for up to 30 years, and Series EE bonds are guaranteed to double in value in 20 years.
6. Bond funds
Bond funds are mutual funds or exchange-traded funds (ETFs) that pool money together to invest in government and corporate bonds. Think of bonds as loans that investors provide to the bond issuer, which can be a corporation, government or agency raising money through the bonds. It means that when you invest in a bond fund, you’re investing in tens or even hundreds of these loans at the same time.
How to invest in bond funds
You can invest in bond mutual funds or bond ETFs through most investment platforms and brokerages. Services and platforms like Public offer simplified portfolios of bonds by doing all the groundwork for you.
Why bond funds are a low-risk retirement investment
While not as safe as high-yield accounts or CDs, bond funds offer great diversification by spreading your money across bonds from many different issuers. Some funds also include bonds from the U.S. government, which are even more secure. But keep in mind that while many investment platforms offer SIPC insurance, it doesn’t cover losing money if the bond issuer defaults on its debt.
7. Preferred stocks
Preferred stocks are company shares that offer regular payments. They fall somewhere in between bonds and regular stocks. They represent ownership in a company, just like traditional stocks, but typically pay dividends at a stated rate. That income stream can be appealing because you may collect dividends without having to sell your shares to realize a return. But they aren’t as safe as bonds, because you come second to bondholders if the issuing company goes bankrupt.
How to invest in preferred stocks
You can buy preferred stocks using the same brokerage account or investment platform you use to invest in traditional stocks or bonds. Many brokerages and investment companies also offer broker-assisted trade services that allow you to call a broker for help in placing your order for a fee.
Why preferred stocks are a low-risk retirement investment
They’re not as safe as bonds, Treasury assets or CDs, but preferred stocks can be more stable than regular stocks. They also offer regular payments, which offer a continuous stream of income from your investment. Depending on your brokerage, you might also receive SIPC insurance. But like regular stocks, preferred stock prices respond to stock market volatility — and you can lose money.
Learn more: Set it and forget it: How to automate your investing with robo-advisors
What to keep in mind when investing after retirement
Retirement doesn’t mean that investing stops. Instead, you’ll want to shift your investing strategy, considering key rules of thumb that include:
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Making sure your retirement portfolio is diversified, with money spread across asset classes and securities with varying risk.
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Creating or updating an estate plan with an estate lawyer, a retirement advisor or another financial professional.
When planning for retirement or maintaining your finances on a fixed budget, talk with a financial planner who can help you plan out your specific retirement needs.
Learn more: Saving vs. investing: Which strategy works best for growing and protecting your wealth?
5 essential tax considerations for retired investors
Managing your taxes in retirement requires careful planning, especially when your investment income could push you into a higher tax bracket or affect your Social Security benefits. Here’s what you should keep in mind to maximize what you keep from your investment returns.
1. Tax-deferred vs. taxable accounts
Roth IRAs offer the biggest tax advantage in retirement since qualified withdrawals come out completely tax-free. Traditional IRAs and 401(k)s give you tax breaks upfront but require you to pay ordinary income tax on withdrawals.
Meanwhile, with taxable brokerage accounts, you pay taxes annually on dividends and interest, but you’ll only owe capital gains tax when you sell investments at a profit. Long term capital gains taxes come at favorable rates that run lower than ordinary income tax rates.
Long-term capital gains tax brackets for the 2026 tax year
|
Tax rate |
Single |
Married filing jointly |
Married filing separately |
Head of household |
|
0% |
$0 to $49,450 |
$0 to $98,900 |
$0 to $49,450 |
$0 to $66,200 |
|
15% |
$49,451 to $545,500 |
$98,901 to $613,700 |
$49,451 to $306,850 |
$66,201 to $579,600 |
|
20% |
$545,501 or more |
$613,701 or more |
$306,851 or more |
$579,601 or more |
2. Municipal bonds and tax-free income
If you’re in a higher tax bracket, municipal bonds can help reduce your tax bill. The interest from these bonds usually avoids federal taxes entirely. Many states also exempt interest from their own municipal bonds from state taxes. For example, if you’re in the 32% federal tax bracket, a municipal bond paying 4% gives you the same after-tax return as a taxable bond paying 5.9%.
3. Required minimum distributions (RMDs)
Once you hit 73, the IRS requires you to take RMDs from traditional IRAs and 401(k)s. Missing these withdrawals triggers harsh penalties – up to 25% of the amount you should have taken. That’s why you should calculate your RMDs early each year and set up automatic withdrawals to avoid forgetting. You can also donate up to $111,000 directly from an IRA to charity to satisfy an RMD and reduce your taxable income.
4. Tax-efficient withdrawal order
Start withdrawals from taxable accounts first, since you’ve already paid taxes on contributions. This lets tax-advantaged accounts continue growing tax-deferred or tax-free. Next, consider taking your Social Security benefits or tapping tax-deferred accounts like traditional IRAs. Save Roth IRAs for last since qualified withdrawals come out tax-free and you can pass these accounts to heirs tax-free.
5. Impact of Social Security and Medicare
Investment income can make more of your Social Security benefits taxable – up to 85% may be taxed if your combined income exceeds certain thresholds. Higher income from investments may also increase your Medicare Part B and D premiums through Income Related Monthly Adjustment Amounts (IRMAA).
Learn more: 5 retirement withdrawal steps to avoid penalties and make your money last longer
Is a financial advisor worth it for retirement planning?
Yes, in most cases. A financial advisor can help you manage your money as you plan for retirement, while giving you a sense of how much you can spend during retirement to make your savings last. Their financial advice and market expertise may also help maximize your savings. If you’re anxious about retirement, working with an advisor can also give you peace of mind by assuring you that you’re on the right path with your financial planning.
Learn more: Financial advisor fees and 10 more investment charges worth reviewing
Other stories in our estate and retirement planning series
FAQs: Planning for and investing in retirement
Learn more about retirement planning and investing rules of thumb for those new to retirement or planning for life’s changes. And take a look at our growing library of personal finance guides that can help you save money, earn money and grow your wealth.
What is dollar-cost averaging?
Dollar-cost averaging is an investment approach that takes the guesswork out of when to invest your money. Instead of trying to time the perfect moment to invest a large sum, you invest smaller amounts regularly — like clockwork, regardless of market conditions. For example, investing $1,000 monthly over a year rather than $12,000 all at once helps protect you from putting all your money in when prices are high. Learn more about this structured way to grow your money — whether you’re a new or experienced investor — in our comprehensive guide to dollar-cost averaging.
What is the biggest expense for most retirees?
Housing is the most expensive part of retirement for most retirees. While many folks might have paid off their homes before retirement, more than 11 million Americans ages 65 and older spend more than 30% of their household income on housing costs, according to the Joint Center for Housing Studies of Harvard University. Some retirees choose to downsize by buying a new home in retirement, though it might not make sense for all retirees.
I have $50,000 to invest. What are the best ways to grow this money?
There’s no one “right” way to invest or grow $50,000, especially if you’re in or near retirement. Your best options will depend on your financial circumstances, budget and long-term goals — starting with paying down high-interest debt and maxing out your retirement funds. See expert recommendations for your newfound nest egg in our guide to investing and growing $50,000.
Editorial disclaimer: Information on this page is for educational purposes and not investment advice or a recommendation to buy any specific asset or adopt any particular investment strategy. Independently research products and strategies before making any investment decision.
About the writer
Yahia Barakah is a personal finance writer at AOL, specializing in investing, banking and credit cards. A Certified Educator in Personal Finance (CEPF), Yahia combines his economics expertise with a genuine passion for helping readers make sense of financial decisions that shape their daily lives and future goals. He’s currently pursuing a Certified Financial Planner designation. Yahia’s research has been featured on Yahoo, FinanceBuzz and FX Empire, among other publications. When he’s not writing about finance, you’ll find him freediving and capturing underwater photography along Florida’s coast and around the globe.
Article edited by Kelly Suzan Waggoner
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