I Have $100,000 Left to Invest in Retirement. Here’s Where I’m Putting It (and What I’m Avoiding).

At this stage of life, you don’t want to gamble the $100,000 you spent decades building. But you also know it’s quietly losing ground to inflation just sitting there. So you do nothing, only to realize that this decision also carries its own set of risks. Here’s where you could put that money to work without taking unnecessary risk.

Why Cash Alone Is the Quiet Risk

Even with a modest 2.5% annual inflation rate, $100,000 today would still need to grow to $128,008 over the next decade just to maintain the same purchasing power. ¹  And that’s without any major market disruptions. 

The hardest part is that you rarely notice it happening. Years later, you simply realize your money doesn’t buy what it once did. Cash may feel safe, but inflation can chip away quietly at its value.

You may think you have to sacrifice income for safety. But you don’t have to choose one or the other. Different portions of your savings can serve different purposes.

Here’s Where I’d Put $100,000

I’d keep one portion in cash, a high-yield savings account or a money market fund for emergency expenses and money I’ll need in the near future. The goal is stability and easy access, not growth.

Another portion would go toward income-producing investments that pay interest or dividends. This can generally include Treasury bonds, certificates of deposit (CDs), dividend-paying stocks and Treasury Inflation-Protected Securities (TIPS), which pay interest and adjust their principal value with inflation. The goal is to generate income rather than maximize long-term growth.

The remaining portion would stay invested for long-term growth. Broadly diversified stock funds or real estate investment trusts (REITs) are common choices here. Because this money won’t be needed right away, it has more time to recover from market swings and potentially outpace inflation.

A financial advisor can help you decide on the right mix of cash, income and growth for your retirement.

These Mistakes Can Sink Your Retirement Investments

Chasing yield and putting too much money into a single investment or asset class are two mistakes that can undermine a retirement portfolio. Both approaches may seem reasonable at first, but each can expose your savings to risks that may be harder to recover from once you are no longer earning a regular paycheck.

One way retirees chase yield is by purchasing investments that offer unusually high income. Junk bonds are one example. They typically pay more than investment-grade alternatives, but that higher yield comes with greater credit risk. During an economic downturn, these bonds could lose value quickly, and issuers may be more likely to default, making the extra income less attractive than it initially appears.

Similar risks can arise with other income-focused products. Variable annuities may look appealing because of their income guarantees, but high fees, complex features and surrender charges could limit access to your money for years. In some cases, those drawbacks may outweigh the benefits, particularly if you already have a diversified portfolio.

Liquidity is another risk to watch. Illiquid investments, including private placements, non-traded REITs and certain alternative funds, may offer the potential for higher returns in exchange for limited access to your money. If your income needs or financial situation changes, selling those investments could be difficult.

Finally, avoid allowing too much of your portfolio to become concentrated in a single stock, sector or asset class. When a large share of your savings depends on one investment, a downturn in that area can have an outsized effect on your retirement portfolio. Diversification cannot eliminate investment risk, but it can help reduce the impact that any one investment has on your overall portfolio.

If you’re investing $100,000 for retirement, a financial advisor can help you evaluate the risks and build a portfolio that aims to last.

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