Options For Seniors
of the perception surrounding investment at a late age. Primarily, the
perception is that investment is a long-term tactic to generate further
income—not a short-term option. And seniors worry that if they try
to invest in stocks, they run a huge risk of losing a lot. Many seniors
today have been saving for a good portion of their lives—and they
expect Social Security—so they’re less likely to think about investment
opportunities later in life.
As a financial advisor, that’s a perception you can change. And, if you do, it could mean huge
benefits for your clients, which improves your reputation with them.
The process is threefold:
• Communicate to seniors that it’s not too late to make money through investments during
their lifetime; there are investments that can pay off within three to five years.
• Communicate the idea that they can use their nest egg now to make investments that will help
their children, successors, and trusts even more if the right investments are made.
• If they don’t think they have the money for investment, there are steps they can take to
change that, including selling their life insurance policy.
As we discuss further options, each one will fall into one of these categories. Because, in the end,
your goal is to show seniors how to be responsible with their finances in both how they spend it
now and where they invest it for the future.
Investment Options For Seniors
Real Estate Investment Trusts
Bonds—Can Be Short Investment Periods
and NASDAQ Composite. However, there is always the chance that
they’ll be outperformed by other investing methods such as high-risk
investment—but those are less likely to produce.
A Real Estate Investment Trust, or REIT, is a way of investing in income-producing real estate
without tying up money long-term. Investing in a REIT allows for the opportunity to invest in real
estate by purchasing stock. The investor shares a portion of the income generated by the real
estate that they invest in and can buy and sell their shares as easily as they can with any stock.
REITs allow for a return on real estate without having to buy, own, or manage properties. REITs
can be found on major stock exchange markets, but investors can also consider options like
public, non-listed, and private REITs. These opportunities will commonly come in the form of
Mortgage REITs or Equity REITS. Mortgage REITs can be through both commercial and residential
properties. With a Mortgage REIT, an investor is purchasing all or a portion of the mortgage or
mortgage securities of a property. Equity REITs work with properties that accrue income through
collection of rent and the sales of the properties.
According to RidgeWorth Investments, “Short-term bonds, best defined as fixed-income
products that mature within one to three years, can be an attractive solution given today’s
historically low yields and potential for rising interest rates.” While in the past few years short-
term bonds have been reasonably well recommended, some investors advise against short-term
bonds and instead advocate for longer investment periods. But if your client is a senior, they
might not want to. Seniors may need their money in a year or two, so it’s pointless for them to
get wrapped up in an intermediate or long-term bond situation. Short-term bonds also allow for
seniors to move their money around easily to other investment opportunities.
Investment Options For Seniors
Inflation Can Make Safe Investments Obsolete
Selling Your Life Insurance
Encourage clients to invest in things that are guaranteed or almost
guaranteed to get a good return. The years they have to make riskier
decisions are behind them, but that doesn’t mean they are without
options. There are more ways to invest than thinking about risky
versus conservative investments.
Short-term bonds aren’t right for everyone, and if a person has a choice, they might be better
served by a longer-term investment. However, if they want to invest money for a year or two and
then use it in a different way, short-term bonds are generally a good option. If a person has short-
term liabilities, it means they should purchase short-term bonds.
When a person is near retirement age, it’s not the time to make risky investments. Having said
that, they can’t be too conservative. Sometimes, if investments are too conservative and their
interest rates are too low, they can actually lose money. Some interest rates on savings accounts
and CDs are so low that, after inflation, they won’t actually make any money. This is the risk of
investing too conservatively and not understanding the market completely. While a conservative
investment sounds good in theory, you need to be the authority on the increase in inflation, the
rate of incremental growth of an investment, and the age and health of the investor.
If a senior doesn’t have the time or money to invest in something like stocks, REITs, or short-
term bonds, they can consider selling their life insurance policy. The life settlement market, which
is the market for people interested in selling their life insurance policies, has been around for
over 20 years. While it is a thriving investment market, many people are unaware that they can sell
their life insurance policy and get the money they need for retirement.
Investment Options For Seniors
Communicating Practical Expertise
And that’s key: to communicate to them that they still have investment
opportunities—but now their options are simply different than when
they were younger.
Life settlements happen for both permanent and term policies, which allows for more
opportunities across the board. Term policies are only eligible if they are convertible, which
means they can be converted from the term policy to a permanent, universal life, or whole-life
Most people consider life insurance policies to be something they won’t see any return on. The
policy is there in the event something happens to them, but what those people don’t know is
that if they qualify for the life settlement market, they can sell their policy and get a return on
their investment that they would otherwise miss out on. While this may sound like a wonderful
opportunity for everybody, there is a qualification process one must go through in order to sell. If
you have any clients who could benefit from a life settlement, help them determine if they qualify
by using our qualification calculator.
As an advisor, your clients rely on you to be an expert on these matters and communicate to
seniors in a way that shows them every choice they have. You can encourage them if you think
there’s an option that’s most beneficial to them depending on age and health and previous
investment. More so, you can provide them with the pros and cons of each of their investment