Show Me the (Safe) Money!!! What to Consider Nearing Retirement


It’s a challenge to find safe money right now if you’re nearing or in retirement. There are several options, but each is a trade-off and none are one size fits all. The worst thing you could do is avoid it, and the best thing you could do is find the right solution for your situation. Good thing you’re here.



Everyone’s fighting for low-interest rates, but

low-interest rates can actually be harmful

This was a fun segment inspired by a question from Johnny. AND Johnny bet me a Coke that I wouldn’t answer his question.

He said this:

“I’m 77 years old. I pulled mostly out of the stock market last year. I can’t see being in it at my age and selecting my own stocks anymore, so I sold off, took the profits I had, and put them in two Schwab short-term money market accounts. They are paying a little over 2% in dividends and those rates are dropping, plus these are really shadow bankers — they’re not FDIC insured…where would be a better place to try to get 2% or more without the risk these involve? You have my question, but I’ll bet you a coke you won’t answer with a direct answer.”

He brought up something really important…

Interest rates are low, which benefits a lot of people, but also harms a lot of people.

Let’s take a look at low-interest rates and answer these questions:

  • who is hurt by low-interest rates and what to do about it?

  • where do you go for “safe money” in today’s market?

  • why is the solution not one size fits all especially for those closing on retirement?


and a little bit lower now!

if you’re nearing retirement, you need “safe money.”

Interest rates have dropped and dropped and dropped AGAIN.

We saw interest rates drop to close to zero in the recession, and then they started coming back up again. The Fed raised rates eight times after that, which totally makes sense because that’s how they boost the economy back up. (More on the Federal Reserve and its recent impact on your personal financial plan.)

We just started lowering rates again, and they never really came back up. What that means is that we’ve had years of folks in or nearing retirement without any safe options.

The knee-jerk reaction is to go into stocks.

If and when we do hit a low place in the market, that’s going to be a problem. Johnny is right for not wanting to get back into stocks.

So what’s the solution?

there are multiple “safe” options to consider and each option has to sacrifice something…

what’s the best fit for your situation?

There are three things are in play in any of the solutions to consider:

  1. Is your money safe?

  2. Is your money liquid?

  3. What kind of return am I getting on my investment?

And there’s going to have to be a trade-off, unfortunately, you can’t always have all three.

Johnny is currently in municipal bonds, which aren’t super safe. Here are some other investment options to consider:

  • Online savings accounts - There are plenty of options here that are FDIC insured.

  • CD (Certificate of Deposit) - You’d be gaining safety, keeping the same return, but losing the tax benefits.

  • Fixed annuities - Many times annuities are used in abusive ways, but in the right situation, they can be really helpful. A ten year fixed annuity right now is paying about 4%. So it’s pretty safe, you’re earning 4% instead of 2%, but it’s not actually liquid.

  • Fixed index annuity - This is a longer-term contract that won’t necessarily pay out as much money. Just like any other financial tool, these can be helpful in certain situations but harmful in others, so just make sure you know exactly what you’re getting into here.

  • Immediate annuities - Based on what Johnny told me about his situation, this is what I would recommend for him. Immediate annuities are based on life expectancy and are basically a pension. You give your money to an A+ rated insurance carrier and they give you back a life income. The older you are, the higher the amount they are going to pay you back for whatever you give them. If Johnny is 77, he should get around 9-10%.

Okay, so those are some good vocabulary words, but which one is best for me?


It’s not A "one-size-fits-All” Decision

Start by Looking at every part of your financial situation & how it works together.

If you read the options above, you can tell there are a lot of options to find YOUR best outcome, and everyone’s situation is different.

The way you move forward needs to be based on all the factors of your financial world. The option that you need is based on you, your goals, and how all the pieces of your financial world (insurance, investments, estate planning, taxes, income, etc.) all come together.

All of those pieces are what make up the whole, and that’s the main problem in the financial advisory world.

The problem in today’s financial world is trusting that you’re getting the best advice…

We are fee-only financial advisors - one of only 8% in the country.

Often when you walk into a fee-based office, they already know they want to sell you an insurance product because they get the commission.

We are different. We are fee-ONLY. That means there are no commissions, no gimmicks, just honest, objective advice.

Especially for those of you nearing retirement, you need to look at every piece of your situation and find a balance of liquidity, safety, return, and the income you need. You have to put the pieces together, and that’s what we do every day! We look at your whole situation. You pay us a flat fee to look at it and strategize with you.

Do you have a team like that? That’s looking at your situation and figuring out how to be creative and strategic to accomplish what you need and desire for your future?

The worst thing you could do is avoid this. If you’re in this position now, sign up for a free consultation with me or a member of my team and we’d love to walk through this with you to get you to a place where you can feel peace and you can feel confident in where you’re going.

Thanks for bringing this up, Johnny. I think I’ll take cherry. #CherryCokeIsTheBestCoke



Do you prefer a classic Coke or the deeper cuts like cherry, vanilla and zero?

other recent blogs + radio shows you may enjoy: