Which ETFs are best for retirees or near-retirees?

Americans are retiring at a record-setting pace amid the aging of the baby boomer generation, too exchange traded funds (ETFs) it has become a popular way for retirees to invest in ways that match their risk tolerance and diversified needs.

A recent report by the Alliance for Lifetime Income found that nearly 4.1 million Americans are expected to turn 65 in the year from 2024 to 2025. 11,200 this year.

ETFs can give investors access to a variety of investment themes that are profitable for retirees, from equity ETFs geared toward dividend yields to bond ETFs that yield interest on government and corporate debt, as well as those modeled on broad indices such as the S&P 500 or international ones. exposure. Some may also include built-in hedging strategies to protect against lower risk.

IS IT A DISASTER FOR RETIREMENT SAVINGS?

“Investing is personal, and the ‘best’ ETFs for someone in or near retirement can vary greatly, depending on their situation. Those in or near retirement should evaluate their situation in terms of their overall allocation, drawdown or growth horizon. their assets, and what level of risk they are comfortable with,” said Lawrence Sprung, CFP and founder of Mitlin Financial.

“Investors with a high level of risk and long term will be included to invest more money ETFs focus on growth. On the other hand, investors who need cash today in these assets with a lower risk tolerance will be given more of their portfolio in income-oriented investments,” added Sprung. “ETFs that may be good for one investor may not be good for another.”

IRS INNOVATES 401(K), OTHER 2025 RETIREMENT PLAN LIMITATIONS

ETFs can be highly diversified or narrowly focused on a particular segment of the market. (Angela Weiss/AFP for Getty Images/Getty Images)

Some ETFs offer retirees and future retirees low-risk protection, says Faron Daugs, CEO of Harrison Wallace Financial Group.

“Generally, these are called ETFs are restricted. They are usually tied to a stock market index and have various percentage protections in case of market downturns,” he said. “This type of ETF allows you to participate in potential growth opportunities but gives individuals a little bit of a parachute in case of a downturn.”

“Another option to consider would be an ETF that invests in dividend-producing stocks. In general, owning a portfolio can make you a dividend return, regardless of the stock’s performance, it can be an attractive way to gain some growth potential and provide some return potential – even if the stock price goes down,” Daugs added.

ETFs can help investors diversify their portfolios by targeting certain types of assets more effectively. (iStock / Stock)

ETF: WHAT IT IS AND HOW TO MAKE MONEY WITH THEM

If a retiree needs income during their golden years, an ETF that pays dividends or interest can be a smart investment, says Ted Jenkin, founder and consultant of oXYGen Financial.

“SPDR Portfolio S&P 500 High Dividend ETF (SPYD), Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) and iShares Select Dividend ETF (DVY) are just a few you can look at,” he said.

Jared Levy, chief market strategist at Peak American Financial, said investors should be “very smart as they approach retirement” because they typically move from “prioritizing growth to prioritizing protection.” Levy added that “it’s important to have an all-weather portfolio that’s not only limited by your risk tolerance, but one that doesn’t get involved when things start to turn sour.”

GET FOX BUSINESS ON THE GO BY CLICKING HERE

He said one of his all-weather holdings includes a Protected S&P 500 ETF (BUFR) and a mix of corporate and Treasury ETFs; bitcoin, gold and precious metal ETFs, a small ETF based on the Russell 2000 and other investment instruments.