15 Savvy Investments for Retirees

Not all investments are equally good for each of us at different points in our lives. As we approach, enter, and live in retirement, certain investments will make more sense than others. Here's a look at some you should consider -- because they can make your retirement more comfortable, secure, and enjoyable. Some are stock suggestions, and some are not.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Let's start with something vital -- your health. We should all aim to be in the best condition we can throughout our lives, but if you haven't done so as you approach retirement, it's smart to start. Healthcare costs can be enormous in retirement, with Fidelity estimating that a 65-year-old couple retiring in 2020 would spend, on average, a total of $295,000 out of pocket on healthcare throughout their retirement -- and that doesn't even include long-term care costs.

So eat nutritious foods, cut back on junk food, exercise, and lose weight if you need to. The healthier you are in retirement, the less you'll likely have to spend on healthcare and the more you'll likely be able to enjoy a wide range of retirement activities.

ALSO READ: Retirement Planning: An Introduction

Next up, if you don't have many hobbies and interests -- perhaps because you've been so busy with work and raising a family -- you should consider developing some. That's because without things to do in retirement, you may end up bored, restless, or even depressed. Many of us dream of retirement, but it's not all it's cracked up to be for some. So consider investing some time getting into any activities that interest you, such as golf, gardening, volunteering, traveling, writing, reading, woodworking, knitting, and so on.

Another smart investment that some people fail to make -- again, perhaps due to working long hours -- is in friends and family. A 2018 report from AARP found that 24% of those 70 and older felt lonely, and those with health concerns were more likely to report being lonely. It's vital to stay socially connected in retirement, so invest in developing strong relationships with your friends and family, not taking them for granted. Plan for how you'll socialize in retirement, too -- perhaps by joining clubs, mentoring younger people, or having regular get-togethers with loved ones.

Let's move on to money now. A smart investment that is suitable for most people at most times in their lives is the low-fee, broad-market index fund. That's a mutual fund or exchange-traded fund (ETF) that holds roughly the same securities as a particular index (such as the S&P 500) in roughly the same proportion. It aims to deliver about the same results as the index, and it can be a great way to just invest in the entire stock market (or most of it) in one fell swoop.

ALSO READ: How to Maximize Your Retirement Savings in the New Year

Those in or near retirement often want to include some bonds in their portfolios, for diversification. There are lots of kinds of bonds, such as corporate bonds, municipal bonds, and junk bonds -- but the safest are Treasuries, which are issued by the U.S. government and generally viewed as rather stable and reliable. Treasuries come in three main varieties: Treasury bills have maturities of less than two years, Treasury notes have maturities between two and 10 years, and Treasury bonds have maturities of more than 10 years. Note that these bonds offer fixed interest rates, which are pretty much guaranteed, but the value of Treasuries can fluctuate along with interest rate fluctuations. That's not a problem if you hold one until maturity, though. Treasuries can be purchased online at TreasuryDirect.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

There's a particular kind of government-issued bond that offers an appealing twist: Instead of having a fixed interest rate, it has one that's adjusted for inflation. These are TIPS -- Treasury Inflation-Protected Securities, which will pay you more in interest during periods of higher inflation.

Retirees need income, as Social Security alone isn't enough for most people to survive comfortably on. One good income-generating kind of investment is a real estate investment trust (REIT) -- a company that owns and leases out real estate and pays out at least 90% of its income in dividends in exchange for tax breaks. A REIT will typically focus on one kind of property, such as apartments, office buildings, medical facilities, retail centers, storage buildings, data centers, and so on. Some own multiple kinds of properties.

ALSO READ: If I Could Do It All Again: Retirees' Investing Advice for Their Younger Selves

The best kind of income for retirees is, arguably, the most dependable kind. Enter fixed annuities, which offer specified sums paid out regularly for a specified period -- which could be the rest of your life -- in exchange for a hefty payment from you. Their downside is that the money you buy them with won't be left to your heirs, and the upside is that you'll keep collecting needed cash infusions, without having to think about and manage investments. (Note that variable and indexed annuities can be problematic, with high fees and restrictive terms. Fixed annuities, whether immediate or deferred, are more straightforward.)

Dividend-paying stocks are another excellent way to generate income, and if they provide enough income, you may not even have to sell any shares. A $400,000 portfolio with an overall average dividend yield of, say, 4%, will kick out $16,000 per year, or about $1,333 per month. Better still, dividends paid from healthy and growing companies will be increased over time, often annually. Dividends can be reduced, suspended, or eliminated, though, if a company falls on hard times. That's why it's smart to spread your money across a bunch of great dividend payers.

The next slides will offer some promising dividend payers for your consideration.

With a market value recently near $40 billion, Public Storage (NYSE: PSA) is the world's top owner and operator of self-storage facilities. It boasts more than 2,500 facilities across 38 states and serves more than a million customers. It also has a roughly 35% stake in Shurgard Self Storage, a major European self-storage specialist, and about 42% of PS Business Parks (NYSE: PSB). This is a relatively easy business to understand, and an attractive one as well. Public Storage is structured as a REIT, and it recently yielded 3.5%.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Verizon Communications (NYSE: VZ) is a major telecom company, with a recent market value near $241 billion and a recent dividend yield of 4.3%. Its empire includes wireless communications and the Fios fiber-optic network, of course, but it also includes media properties such as Yahoo!, TechCrunch, Engadget, AOL, HuffPost, Build, Makers, Autoblog, and In The Know. It's plowing tens of billions of dollars into its 5G network.

ALSO READ: 8 Stocks That Could Double Your Money in 2021

U.S. Bancorp (NYSE: USB), with a market value recently near $70 billion and a dividend yield near 3.6%, is extremely well regarded among big banks, known for lending responsibly and avoiding risky assets. Like other banks and most businesses, it's challenged by the ongoing pandemic and may see defaults grow if unemployment continues and grows. It's not sitting still, though, as it has been successfully growing its digital business, with many more loan sales being originated online in recent years and more customers using its app than ever.

Pharmaceutical giant AbbVie (NYSE: ABBV) offers investors a fat dividend that recently yielded 4.9%. The company recently sported a market value near $188 billion, and more than 52 million patients worldwide received its treatments. AbbVie's acquisition of Allergan is boosting its performance, and while the looming patent expiration of its blockbuster drug Humira is worrying many investors, other drugs in its stable are performing very well. Sales of its blood cancer drug Venclexta popped 59% year over year in its last quarter, and its immunology drugs Skyrizi and Rinvoq brought in hundreds of millions of dollars in the quarter as well.

Based in Rhode Island and recently sporting a market value near $90 billion, CVS Health (NYSE: CVS) is a pharmaceutical giant with growth drivers beyond just its pharmacy offerings. For one thing, it has acquired health insurer Aetna, and it has a growing MinuteClinic network. The company has a lot of debt, but it has been paying it down -- and it's expecting around $11 billion in free cash flow for all of 2020. CVS Health's dividend recently yielded 2.95%.

ALSO READ: My 3 Best Stocks to Buy in January

Waste Management (NYSE: WM) is another attractive dividend-paying stock, with a yield recently near 2% and a market value near $50 billion. The company is North America's top waste management specialist, involved in the collection, transfer, disposal, and recycling of waste. It recovers resources from trash, too -- through its landfill gas-to-energy facilities. It's smart to invest in companies that seem to have solid competitive advantages, and it's hard to see any rival knocking Waste Management from its top position. It's also hard to imagine the need for trash management and recycling dropping anytime soon.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Don't leave your retirement up to chance, assuming that Social Security will provide most of what you need. The average monthly retirement benefit check was recently $1,523 -- or about $18,276 per year. Instead, plan for how much income you'll need and how you'll achieve it -- perhaps via a combination of dividend-paying stocks, an annuity or two, and if you're lucky, a little pension income. There are lots of ways to generate retirement income.

Selena Maranjian owns shares of AbbVie and Verizon Communications. The Motley Fool recommends CVS Health, Verizon Communications, and Waste Management. The Motley Fool has a disclosure policy.