Home / finance / Pros And Cons Of Some Of The Best Retirement Investments

Pros and cons of some of the best retirement investments

Pros and cons of some of the best retirement investments

Investment of any nature and for any goal is always a good idea, apart from saving for your retirement. The rising rate of inflation coupled with reduced pension plans demonstrate the need for retirement-focused investments, which will not just deliver value over an extended period of time.

That being said, not all assets are capable of delivering high returns at low risk and have their own set of importance to investor portfolios. To help you make an informed investment decision, here are some best retirement investments and their pros and cons.

  • Cash-balance plans

Similar to pensions, a cash-balance plan offers a fixed amount of return at the time of retirement. However, unlike pensions, every employee has a cash-balance account where the lump sum amount is mentioned. Employers credit this account with a set percentage of the employee’s yearly compensation plus interest charges.

Pros: A defined-benefit is a major attraction of cash-balance plans. Additionally, you don’t have to pay a single penny for it and yet it offers a tremendous certainty of retirement funds. In case of a job switch, these accounts can be transferred to your new job.

Cons: Should you choose to retire early, the plan wouldn’t benefit much. Moreover, older employees stand to lose if the employer switches from pensions to cash-balance plans.

  • Retirement annuities

Retirement annuities are contractual insurance-like agreements between you and the insurance company. Similar to various types of insurance, you pay a specified premium monthly or a lump-sum amount to the insurer for a specified period of time. In return, you get monthly, semi-annual, or annual income from the insurance company after retirement.

Pros: The biggest advantage of annuities is the promise of a guaranteed stream of income until you live. Annuities are also tax-deferred, which gives you control over when you pay your taxes. Fixed retirement annuity, meanwhile, even promises a certain rate of return.

Cons: Annuities demand hefty fees, which are mostly paid to agents. A way to get around it is to buy it directly from the insurer. Lack of liquidity, higher tax rates, and its complexity are some of the other drawbacks of this asset.

  • Balanced funds

Balanced funds are a good choice for investors nearing retirement. Here, your money is invested across a range of stocks and bonds. Primarily, 60% of your money is invested in stocks, and the remaining 40% in bonds. These funds are different from target-date funds, which are designed for individuals looking to retire at a specific time.

Pros: The biggest advantage of balanced funds is its diversification. Money is allocated in both stocks and bonds simultaneously, unlike investing individually in both which can prove challenging. Also, a mutual fund management team provides continued assistance and guidance, which is highly important for maximizing returns.

Cons: Fees can sometimes be higher in balanced funds and investors themselves have little say in the allocation of funds in different assets.

Roth gold IRA
Another option worth considering is Roth gold IRAs, which can be used to invest in tangible assets such as art, antiques, collectibles, and real estate. Contributions to this account are made post-tax and are considered non-deductible. For those up to the age of 49, the contribution limit is capped at $6,000 per year. Those who are 50 and older can contribute up to $7,000 to this account.

Pros: These contributions can provide a safety net against inflation, as they retain their value well. They are also a great option for those who are looking to diversify their investments.

Cons: Roth gold IRAs are associated with high maintenance fees, volatility, and lack of liquidity. Additionally, physical assets may be associated with a risk of loss or theft.

Recommended

Learn about these 3 types of hearing loss

Learn about these 3 types of hearing loss

Hearing loss, deafness, or impairment is the partial or total inability to hear sounds. People with low to moderate hearing impairment face challenges in understanding what the other person is saying in a noisy environment. Whereas, people with severe deafness cannot hear anything, and rely completely on lip-reading and sign language skills. There are three main types of hearing loss: sensorineural, conductive, and a combination of both. Let’s understand these types in detail and learn about the causes, symptoms, and treatments of each type. Sensorineural hearing loss It’s the most common type of hearing loss. Sensorineural is permanent hearing loss often caused by damage to the tiny hair cells that line the inner ear or the auditory nerve. The damage stops or weakens the transfers of nerve signals to the brain. These signals are essentially the intensity and clarity of sounds. Causes: Aging and exposure to loud noises for a long period of time are the most common cause of the damage. Certain medications and illnesses can also increase risks. It can even be genetic, and pass on to the child in the mother’s womb. Treatment: There is no medical or surgical treatment available to repair the tiny hair cells once they’re damaged.
Simple lifestyle changes that reduce the risk of heart diseases

Simple lifestyle changes that reduce the risk of heart diseases

The heart is the most crucial organ in the body and as the system will cease to function if the heart stops or loses momentum pumping fresh oxygenated blood. This is why it is vital to not neglect your heart health at all and responsibly maintain a healthy, stress-free, and more importantly, a happy lifestyle. Here are a few simple lifestyle changes that will help support a healthy heart function. Switch to a healthy diet Avoid eating foods that are rich in trans and saturated fats. Most foods you find on the shelves of the supermarket contain large quantities of one or the other. Instead, switch to low-fat high fiber alternatives to help manage cholesterol. Maintaining a healthy cholesterol level in the body automatically reduces the risk of heart diseases. The simple reason for this is that fats that normally block major arteries and blood vessels are eliminated from these foods choices. It is also advisable to limit the salt (sodium) intake to control blood pressure and sugar to reduce the risk of diabetes simultaneously. Change certain lifestyle habits Reduce the number of alcoholic or carbonated drinks you have regularly. For men, it is advisable to have not more than two drinks and day and women must have only one.
How to distinguish between heartburn and GERD

How to distinguish between heartburn and GERD

Heartburn is an unpleasant, burning sensation in the chest that is more common than a lot of individuals realize. Pregnant women, older men, and even young adults experience it frequently. Despite it being such a prevalent experience, not many know that heartburn has actually nothing to do with the heart and everything to do with the stomach and the esophagus. Unsurprisingly enough, heartburn is also used interchangeably with GERD. But, before we get to deciphering heartburn and GERD, let’s understand what acid reflux is. What is acid reflux or GER? Acid reflux occurs when the lower esophageal sphincter or LES becomes weak, allowing the contents of the stomach to travel in the wrong direction, back up the esophagus. Acid reflux is also called GER or gastroesophageal reflux as it involves the stomach and esophagus. This condition can usually be resolved with over-the-counter medication. What is heartburn? Heartburn is a burning or painful sensation that is experienced in the chest. Since the lining of the esophagus is not as strong as the lining of the stomach, the acid from the stomach can cause a burning sensation in the chest. This pain or burning sensation that is heartburn can often be misconstrued for a heart attack.
5 common joint conditions and how to treat them

5 common joint conditions and how to treat them

A joint or articulation is made from two bones that aid the body in movement. There are many forms of joint conditions, which, in many cases, arise from the wear and tear of bones. Arthritis is one of the major and most common health conditions in the country, and its intensity increases with age. Here are some common types of joint conditions that you need to know: Osteoarthritis With almost 10 percent of men and 13 percent of women aged over 60 suffering from osteoarthritis, it is one of the most prevalent joint conditions in the country. Osteoarthritis occurs due to the wear and tear of the cartilages that protect the ends of bones. It commonly affects joints of the spine, hands, hips, and knees. If left untreated, this wear and tear of the cartilage soon leads to bone degeneration, thereby affecting flexibility and range of movement. Treatment for osteoarthritis depends on its severity and the patient’s age. Mild symptoms can be treated through medications, physiotherapy, and changes in lifestyle, whereas moderate to severe cases may require surgical intervention. Spondyloarthritis Spondyloarthritis, also referred to as spondyloarthropathy, is a type of rheumatic disease that causes inflammation in various joints. There are two types of spondyloarthritis—axial spondyloarthritis, which causes inflammation of the joints in the chest, spine, and hip bone, and peripheral spondyloarthritis, which causes inflammation in the fingers, knees, and toes.
Tips to help you strengthen your immune system

Tips to help you strengthen your immune system

Natural selection has transformed the way in which the human immune system works. While some human genes have evolved to become immune to certain diseases, others have not. This leaves a whole lot of people prone to certain diseases and disorders. That said, there are ways to boost the immune system, improve one’s diet, and lead a healthier lifestyle. Here are a few simple steps that you can take to strengthen the immune system: Ensure adequate sleep There are quite a few studies that prove the relationship between adequate sleep and the strength of the immune system. As an adult, you should ensure that you get seven to eight hours of sleep every night. A teenager should get eight to ten hours of sleep, whereas a young child should get at least 14 hours of sleep on a daily basis. If you have disturbed or no sleep, then you can improve your sleep cycle with these quick tips: Try sleeping in a room that is completely dark Get to bed at the same time every night. This will help regulate your sleep pattern Avoid using electronics that emit blue light before bed Maintain a diet of fruits and vegetables Fruits, vegetables, and whole grains contain essential minerals, fiber, vitamins, and antioxidants.
8 lesser-known facts about the liver

8 lesser-known facts about the liver

Considered the second-largest organ in the body, the liver plays an extremely important role in a variety of functions. It is key to the body’s metabolism; and helps burn fat and maintain body weight. It is located above the stomach and beneath the diaphragm, its size similar to that of a football. While such information is common knowledge, there are a few not-so-known facts about this organ. Read on to find out more: It is the only organ that can regenerate Unlike any other organ, the liver has the miraculous ability to regenerate and regrow, needing just 25 percent of the original tissue to do so. According to a study, evolutionary safeguards are responsible for this effect, which is a central concept behind liver transplants. It is the body’s detox center The liver filters everything we eat and drink, ridding the body of the materials that are not meant for it. It first burns toxins using enzymes and oxygen. This is followed by the second step, which combines toxins with amino acids that are later flushed out through urine or bile. It is multifunctional Identified as one of the most complex organs in the body, the liver performs hundreds of vital functions.