Money Advice

3 retirement 'investments’ (and 1 type of person) to avoid

Posted by The Simply Money Advisors Team on Aug 31, 2018 5:13:00 PM

You’ve been working hard and saving well your entire life. Don’t let one bad decision destroy everything you’ve been planning for! These are some of the most common investment products, scams and fads aimed almost exclusively at retirees and pre-retirees.


While there are several variations (fixed, variable, indexed), annuity insurance products generally require that you hand over a lump sum of cash so you can receive a monthly income, either for a fixed period or for the rest of your life. You can begin receiving your income stream immediately, or you can defer your payments so they begin at some point in the future.

However, you should think twice before buying. For one, salespeople might be recommending an annuity merely to receive a commission; these products often have high fees that could cost you 3% to 4% every year; and in an emergency, you might have to pay a surrender charge to get your own money back.

Permanent life insurance

This is a blanket name for life insurance that typically offers a death benefit and a savings or investment portion. Over time, the savings can accrue into a “cash value” against which the policy owner can borrow funds. Three popular types are universal, whole life and variable.

But permanent life insurance is a questionable investment choice because many people nearing retirement no longer need life insurance. Plus, if you do, less expensive “term” life insurance might be a better option (permanent life insurance premiums can be $6,000 a year, or more!)

And yes, salespeople selling permanent life insurance policies are paid by commission, so the odds increase that you’re being pushed to buy something that may not be right for you.

Gold (and its fear-based marketing)

Sometimes, it can make sense to own gold as a part of your overall investment strategy. But not all the time. And certainly not because some slick, manipulative ad is trying to scare you into buying.

Buying any sort of financial product based on emotion and/or fear can interfere with your ability to make a smart decision. For instance, did you realize that while stocks actually rose from 2010 to 2017, contrary to popular opinion, over the same period of time gold actually fell?

You wouldn’t have guessed this if you’ve seen a commercial for gold.

Non-fiduciary advisor

While not an “investment,” working with the wrong kind of financial advisor can also torpedo your retirement prospects. You should always look for someone who is a “fiduciary,” meaning he or she is legally obligated to place your interests above their own.

An advisor who isn’t a fiduciary may be giving you advice motivated by outside compensation factors; may be under the pressure of meeting a sales quota; and they aren’t actually required to offer you the best available product or advice.

The Simply Money Point

Every day, pre-retirees and retirees receive inappropriate investment advice from self-proclaimed financial advisors. You owe it to yourself to stay away from certain products, people, and promises.

And to learn more about protecting yourself (and your money) from lousy investments and some of the unscrupulous people in the financial services industry, register for our free, one-day only “Retire Beware!” workshop on September 11th.

Take me to Retirement Resources

Topics: Retirement Planning


Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Simply Money Advisors), or any non-investment related content, made reference to directly or indirectly will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, this content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained here serves as the receipt of, or as a substitute for, personalized investment advice from Simply Money Advisors. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Simply Money Advisors is neither a law firm, a certified public accounting firm, nor a tax advisory firm and no portion of the blog content should be construed as legal, accounting, or tax advice. Please consult your own attorney, accountant, and tax advisor for legal, accounting, and tax advice. A copy of the Simply Money Advisors’ current written disclosure statement discussing our advisory services and fees is available for review upon request. Advisory services offered through Simply Money Advisors, a SEC registered investment adviser. Insurance services are offered through Simply Money Insurance Agency, a separate entity from Simply Money Advisors. Simply Money™ and the spiral symbol are trademarks of Simply Money IP Holdings, LLC.

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