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Financial investments for baby boomers

Tuesday, January 13th, 2009

retirement money

retirement money


There are about 78 million baby boomers in America and according to a USA Today survey, their saving quotients are a mere 34% of the money needed for comfortable retirement. It seems to have become an widespread American trait; many of us baby boomers are just not good savers. Yet good investment decisions are critical in order to survive difficult economic times. As baby boomers are reaching retirement, it is essential for us to alleviate as much stress as we can by investigating our financial retirement options. While pensions alone are usually insufficient to provide security and support a decent style of living, boomers should not allow recent market downturns to deter financial investing. We may always have debts and commitments, however, the challenge is to have a balance by adopting appropriate investment strategies and choose “personally wise” financial investments. And always keep in mind. The earlier you begin investing the greater the typical benefits.

Some good financial investments for baby boomers:

Life-cycle funds

Life cycle funds are mainly balanced mutual funds which are structured between equity and fixed income. Its overall asset allocation is automatically adjusted from a higher to lower risk zone as the investor’s age of retirement nears. These are also known as “age-based funds” or “target-based funds”. Initially the fund will have the highest risk but as time progresses, the fund will begin its upward incline increasing towards fixed income and focusing on appreciation and retirement income generation. It is a good investment choice for those who are looking for less risk than the stock market’s weekly fluctuations.


DRIP (Dividend Reinvestment Plan) is basically an equity investment option where the dividend received on shares or mutual funds is invested back into the underlying equity, which allows the money to be invested immediately without brokerage fees and results in appreciation and compounding. The advantage is that the shares are purchased at the dividend payment rate, a much discounted rate from the actual price of shares. It’s a good way to increase the value of your investment. But the DRIP plan should be balanced with other investments.

U.S. Treasuries
U.S. Treasuries bonds are notes and bills issued by the United States Federal Government. It is the safest and most reliable way of investing and should surely be a part of any investment portfolio. U.S. Treasuries provide capital preservation which is more important to baby boomers who are nearing retirement.

Certificates of Deposit

Also known as CDs, Certificates of Deposit are similar to bank savings accounts. The difference is that they are issued for a fixed term and usually with a fixed interest rate. They are actually time deposits issued by bank credit unions. The money cannot be withdrawn for the agreed time period allowing for higher interest rates. There are now new options in which CDs or Certificates of Deposit are indexed to the stock markets; virtually risk free.

Unit Investment Trust

UIT as it is preferably called, is a US investment company that offers a fixed portfolio generally consisting of bonds and stocks. They are given as redeemable units to the investors for a specified period of time. Unit Investment Trusts (UITs) are mainly designed to provide capital appreciation.
Individual Retirement Account

Individual Retirement Account (IRA) is a best bet for baby boomers. It is widely known an widely used. It is a retirement plan account that offers tax advantages for retirement savings. IRAs are helpful in reducing tax bills and if you are over the age of 50,you can add more to your account than the limited yearly contributions.

Variable Annuity

Variable Annuity is a contract between you and your insurance company. Here the insurance company assures to pay a minimum amount at the accumulation stage. The remaining income payment depends on the performance of the managed portfolio. VA or variable annuity gives a much required insurance coverage along with allowing your money to grow by investing a portion through the managed portfolio. Thus capital appreciation accrues along with the insurance. It is very important to be conscientious while choosing a variable annuity. Be aware of all front end and back end charged fees as they can vary widely.

These financial investments are suggestions for baby boomers to have a safe and tension free future. Although there is no scarcity of baby boomers that are daring enough to go ahead and start businesses or invest in things like paintings, sports memorabilia or what ever interests them. What ever may be your choice of financial investment, make sure that the portfolio is a good mix of high risk and low risk and/or preferably assured return options. Gear up and go ahead for some smart financial investments.

Do you have an investment question or strategy you’d like to share? We at Boomer Yearbook would love to hear it. is a Free social networking site connecting the Baby Boomer generation. Share your thoughts, rediscover old friends, or expand your mind with brain games provided by clinical psychologist Dr. Karen Turner. Join today to discover the many ways we are helping Boomers connect for fun and profit.