Ask Money

Working and saving in retirement

Chris Farrell May 26, 2011

Question: I will retire at the end of this year but my intentions are to work somewhere else full-time and invest that entire paycheck in something. Where do you suggest I sink that money where I won’t ripped off or be too risky like stocks? Gary, Marion, OH

Answer: What you are planning on doing is increasingly common. Lots of people will say goodbye to their boss and their colleagues for the last time, but they’ll continue working to earn an income during their so-called retirement years. I’ve called it the “job-tirement.” For some people it’s a voluntary redefinition of retirement because they want to stay engaged at the workplace; for others it’s a necessary step because their savings are slim; and, in reality, it’s a mix of the two for most people in your circumstances.

There are actually a lot of good places to save your money safely. The most important way is through diversification–not putting all your eggs in any one investment-and-savings basket. For your core safe holdings , I tend to like online FDIC-insured accounts (and the credit union equivalent), U.S. Treasuries, and inflation-protected securities.

If you’re comfortable taking on a bit more risk with some of the money you could add high quality corporate bond funds and blue chip municipal bond funds with low fees and on the shorter end of the maturity spectrum.

No matter what, stick with well-known blue-chip financial institutions and where you money is either segregated into custodial accounts (like mutual.funds) or backed by the full faith and credit of the federal government. It’s an approach that will help you from falling prey to investment fraud.

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