The 3 Best Investments People in Their 70s Can Make

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In your 70s? Read on to see where to put your money. 

By the time you reach your 70s, there’s a good chance you’ll either be retired or right on the cusp of ending your career. And that means you may be reliant on your retirement account in the absence of a paycheck from work.

That’s why it’s so important to invest strategically during your 70s. And here are some options you may want to look at.

1. Municipal bonds

Municipal bonds differ from corporate bonds in that they’re not issued by corporations. Rather, they’re issued by states, cities, and other localities looking to raise money to fund different public projects.

Municipal bonds commonly pay interest twice a year, and that’s an important thing in your 70s, since you might need the income to pay for living expenses. But what makes municipal bonds a good choice is that unlike corporate bonds, the interest income you collect will not be subject to federal taxes. And if you buy municipal bonds issued by your state of residence, you can generally avoid state and local taxes on that income, too.

One thing you should know is that municipal bonds might pay a little less interest than their corporate counterparts. If you buy highly rated municipal bonds with a 10-year maturity, you may be looking at an interest rate between 2% and 2.5%. Municipal bonds with a 20-year maturity might pay a little more than 3%, but you may not want to lock yourself into such a lengthy term in your 70s.

However, municipal bonds also, historically speaking, have a lower default rate than corporate bonds. And at a time in your life when you’re probably looking to minimize your risk, that’s important.

2. Dividend stocks

It’s a big myth that stocks are not an appropriate investment for retirees. Quite the contrary — you might need stocks in your brokerage account or IRA so your money continues to grow at a decent pace.

That said, during retirement, it’s a good idea to own stocks that pay you regularly in the form of quarterly dividends. That way, you don’t just have to wait for their share price to appreciate in order to access money.

Now, it’s worth noting that unlike municipal bonds, where the issuer is contractually obligated to pay interest, dividend payments are not guaranteed. It’s more than possible for a company to start off paying a dividend only to later shrink it, or stop that practice altogether. But if you choose stocks with a long history of paying dividends, you can minimize that risk.

3. CDs

CDs, or certificates of deposit, are a low-risk investment for people in their 70s because as long as you bank at an institution that’s FDIC-insured, you’re guaranteed not to lose your first $250,000 in deposits. Plus, depending on what interest rates look like, you may find that a CD pays you generously without the risk associated with owning stocks.

That said, you’ll need to keep an eye on what CDs are paying, and you’ll generally want to stick to shorter-term CDs (meaning, 12 months and under) to maintain some liquidity. It’s also a good idea to ladder your CDs so you have money freeing up at different intervals. That way, if CDs start paying less interest, you’ll have the option to invest elsewhere.

It’s important to invest your money in savvy ways during your 70s. To that end, it’s a good idea to focus on options that pay you steadily, and these three all fit that bill.

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