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What’s changed?

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The first problem Americans face is a good one to have: We’re living longer. The current life expectancy in the U.S. is about 79 years old. Thirty-five years ago, when you might have started planning for your retirement, life expectancy was under 75.

Government data shows that seniors are spending an average of $50,000 per year — so if you still want to retire on schedule, your investments will need to make up the difference.

The second problem doesn’t have as much of a silver lining: weakening returns on safer investments.

Historically, people nearing retirement have funnelled more of their money into ultra-conservative options like bonds, certificates of deposit or even just a money market account. None of these pay out like they used to.

Consider the 10-year Treasury note. Back in 1981, the yield reached a high of 15.84% — no one would scoff at putting your retirement money into an investment like that.

But by the end of the decade, it had fallen to 9.5%. Now, it’s down to a just 1.5% — not much better than some savings accounts.

The same is true of CDs. Savers had access to double-digit yields back in the 1980s, and even as recently as the 2000s, a one-year CD could return between 1.5% and 5%. Now you’d be lucky to find a yield as high as 0.55%.

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What options do you have?

Luckily, living longer also gives retirees and people nearing retirement more time to entertain slightly riskier investments.

Here are five options to consider that can offer reasonable returns — without taking a gamble you can’t afford.

Real estate investment trusts

details of a modern office building with many windows
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The real estate market is only getting hotter, but buying a second property takes an enormous amount of capital. Plus, you’re trying to retire — not take on the part-time job of being a landlord.

Real estate investment trusts (or REITs) offer everyday investors the chance to effectively crowdfund the purchase of residential homes or commercial properties.

With as little as $500, you can start building a real estate portfolio and reap the profits.

Dividend-paying stocks

Dividend-paying stocks offer investors a relatively stable source of income. The companies that offer this type of stock will distribute a portion of the company’s profits to shareholders on a regular basis, usually once a quarter.

You have two ways to get them: either through dividend funds or as individual stocks.

There is a certain amount of risk you take on investing in stocks but there’s also a nice payoff if the stock price rises. If you’re especially risk-averse, dividend funds help offset the chance of a big loss by ensuring you have other stocks to fall back on within the fund if one takes a dive.


Tractor spraying pesticides at soy bean fields
vlalukinv / Shutterstock

Investing in farmland has proven to be a successful strategy for one of the richest men on the planet, so it’s definitely worth a look.

The great thing about this asset is its intrinsic value: Even when the economy is in shambles, people still need to eat. Yet studies have also shown farmland can offer better returns than bonds, gold and often the stock market.

With the help of a new investment platform, you can pool your funds with other investors to buy stakes in individual farms without the responsibility of running it yourself. In exchange for your investment, you’ll get a cut from the leasing fees and crop sales — earning a tidy sum while the asset continues to grow in value.


Annuities are contracts sold by financial institutions or insurance companies. They’re designed to help people deal with the prospect of outliving their savings in retirement.

Once they’ve reached the payout phase, you’ll receive a stream of income for either a predetermined period of time or your entire life. They do come with various fees, so you’ll want to read all the terms and conditions before you choose to invest in one.

If you run into trouble early on, you won’t be able to access the funds without penalty, so make sure you have other sources of income during that time.

Whole life insurance

Multi-Generation Family Sitting On Sofa At Home Relaxing And Chatting
Monkey Business Images / Shutterstock

Whole life insurance provides you with lifelong coverage for your family — and in addition to the actual insurance component, you’ll have a “cash value” to bank on.

Part of your premiums go toward the cash value component, which is invested and grows at a guaranteed, steady rate. The earnings on your money are tax-deferred.

When you buy whole life insurance, you can borrow against the cash value, tap it as a source of income, use it to pay policy premiums and even trade it for a larger death benefit for your loved ones.

And if you choose a “participating” policy, you’ll also share in the company’s profits in the form of dividends.


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Sigrid Forberg Associate Editor

Sigrid’s is Moneywise.com's associate editor, and she has also worked as a reporter and staff writer on the Moneywise team.


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