Yahoo Finance Retirement Advisors: 5 Reasons You Should Still Invest After You Retire
If you’re getting close to retirement and wondering whether you should still continue to invest once you hang it up for good, the answer is yes.
“Retirement isn’t just a single day in time, it’s a phase of life, and retirees need to focus on continuing to invest for the future so that they have what they need to meet their goals 5, 10, even 20 years from now,” said Stephen Kates, CFP, principal financial analyst at Annuity.org. “Growth in your retirement portfolio is just as important as it was pre-retirement. While you may need income from part of your portfolio today, you still need a portion of your portfolio to grow for tomorrow.”
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Consider this advice from Kates and other retirement advisors to help you understand why investing after retirement is a wise move.
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Longevity
Sean Lovison, CFP, CPA, founder and lead planner at Purpose Built Financial Services, said that retirees often underestimate their life span — a mistake that could cause them to fall short of funds in retirement.
“Modern medicine is extending lives, and living longer means needing income for a more extended period,” he said. “Investing helps ensure that retirement savings last and keep pace with rising costs.”
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Inflation
Chris Urban, CFP, RICP, founder of Discovery Wealth Planning, said keeping up with inflation is the biggest reason to keep investing after you retire.
“Historically, average annual interest earned on cash over several decades has not been anywhere near the average annual historical returns that have been achieved by investing in financial markets (stocks, bonds, etc.),” he said. “If you choose not to invest, the purchasing power of your dollars will erode significantly over time and, if you are at all at risk of running out of money, this could become a big problem for you later in life.”
Unexpected Expenses and Opportunities
You never know what tomorrow may bring — both before retirement and during retirement.
“Life throws curveballs,” Lovison said. “Unexpected medical bills, home repairs or even the desire to travel can arise. Having a portion of savings invested allows for financial flexibility and the ability to seize opportunities.”
Legacy
Continuing to invest can make a difference when it comes to what you leave behind as well.
“Maybe you do not need some (or most) of the money you will have accumulated but you want to leave it to your children, grandchildren, friends, charities, etc.,” Urban said. “By investing in financial markets over several years (perhaps decades), there is a better opportunity to meet your goals and also increase your legacy gifts.”
“In one case, I worked with a retired couple who created a living trust that allocated funds not just for their own care, but also set aside a portion of their investment returns for their grandchildren’s college education. This strategic planning enabled them to leave a lasting legacy while managing their current needs effectively,” said Marty Burbank, an attorney experienced in estate planning and elder law and the owner of OC Elder Law.
Peace of Mind
Retirement shouldn’t be littered with worries about whether you’ll have enough money. Instead, it should be a time to relax and enjoy a new chapter in life.
“Knowing that your money is working for you even in retirement provides invaluable peace of mind and a sense of financial security,” Lovison said.
However, if you’re worried about losses in the stock market, consider this advice from Kates.
“As unnerving as stock market drawdowns can be, history shows that more than three out of every four years the stock market is positive,” he explained. “Work with a trusted advisor to find the right mix of flexibility, protection and growth for your situation, and you’ll have a happy and robust retirement income plan.”
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