1. Money
You can opt-out at any time. Please refer to our privacy policy for contact information.

10 Best Retirement Investments

Learn About Retirement Investments Before You Invest


Crocodile skin suitcase with US dollars
Peter Dazeley/ Photographer's Choice/ Getty images

If you're searching for information on retirement investments you're probably looking for investments that will provide income. If so, you've come to the right place. Below, you'll find a comprehensive list of retirement investments with additional information on each. They are not listed in any specific order or ranking.

Learn all you can, and remember, it makes the most sense to choose your retirement investments as part of an overall investment plan. Investments are best chosen to work together - not as individual solutions. Below are 10 options to use as part of your plan.

1. Total Return Portfolio

One common way to create retirement income: create your own portfolio of stock and bond index funds (or work with a financial advisor who does this). The portfolio is designed to achieve a respectable long term rate of return, and along the way you follow a prescribed set of withdrawal rate rules that will typically allow you to take out 4-7% a year, and in some years, increase your withdrawal for inflation.

2. Retirement Income Funds
These types of funds make a fabulous retirement investment. They do everything that a total return portfolio (listed above) does, all in one package. They automatically allocate your money across a diversified portfolio of stock and bond funds. They then distribute monthly income, but unlike an immediate annuity, you retain control of your principal, and can access your money at any time. Of course if you do withdraw some of your principal, your monthly income will subsequently go down.

3. Immediate Annuities
An immediate annuity is a retirement investment that can provide guaranteed income. The guarantee is as strong as the quality of the insurance company that issues it. With an immediate annuity you agree to give the insurance company a lump sum of money and the insurer agrees to pay you a monthly income as long as you live. If it happens that your time on earth is up a year after you bought the contract, the insurer keeps what money is left over. If, by contrast, you live to well over 100, the company has to keep paying and may end up paying out substantially more than what you paid in.

4. Bonds
When you buy a bond you loan your money to either the government, or to a corporation. The borrower agrees to pay you interest for a set amount of time and when the bond matures your principal is returned to you. The interest income you receive from a bond, or from a bond fund, can be a good, steady source of retirement income.

5. Investment Property
Investment, or rental property, can provide a stable source of income, but there will be maintenance requirements, and when you own real estate you will inevitably incur unanticipated expenses. If you own a portfolio of investment properties, and know what you are doing, they can make great retirement investments.

6. Variable Annuity With A Lifetime Income Rider
A variable annuity is a completely different type of investment than an immediate annuities. In a variable annuity your money goes into a portfolio of investments that you choose and the insurance company can layer certain guarantees, called riders, over that portfolio - for a fee of course. Some of the newer variable annuity products offer lifetime income riders that are quite attractive.

7. Safe Investments
You always want to keep a portion of your retirement investments in safe alternatives. The primary goal of the five safe investments on this list is to protect what you have rather than generate a high level of current income.

8. Closed End Funds
The majority of closed end funds are designed to produce monthly or quarterly income. This income can come from interest, dividends, covered calls, or in some cases from a return of principal. Each fund has its own objective; some own stocks, others own bonds, some write covered calls to generate income, others use something called a dividend capture strategy. They are an interesting investment vehicle, and when mixed together in a portfolio they can be an appropriate retirement investment, just be sure to do your research before buying.

9. Dividend Income Funds
Instead of buying individual stocks that pay dividends, you can choose a dividend income fund, which will own and manage dividend paying stocks for you. Personally, I think the retirement income funds, listed a few sections above, make better retirement investments than a dividend income fund.

10. REITs/Real Estate Investment Trusts
A real estate investment trust, or REIT, is like a mutual fund that owns real estate. They manage the property, collect rent, pay expenses, collect a management fee for doing so, and distribute the remaining income to you, the investor. When used as part of a diversified portfolio, REITs can be an appropriate retirement investment.

Dana Anspach, CFP®, is one of only a handful of people to hold the Retirement Management Analyst designation. She has been About.com's MoneyOver55 Expert since 2008 and is the founder of Sensible Money, LLC. You can learn more about Dana's work in her bio.

©2014 About.com. All rights reserved.