Safest Investments for a Boomer’s Portfolio

As you approach retirement, you’ll start to think more about preserving what you’ve saved rather than achieving aggressive growth. You don’t want to lose the portfolio value that you worked so hard to build over your career.

However, most people who make it to the age of 65 are living almost another 20 years in retirement. Social Security data shows that a man who reaches age 65 can expect to live until 83.09; for women, that age rises to 85.7; and one out of every three 65-year-olds will live until at least age 90. With wealth preservation and income generation a top concern, you may want to consider these safe investments to keep your money protected.

Key Takeaways

  • As you get closer to retirement, it is important to find safer investments to protect the value of your nest egg.
  • Inflation is an important consideration, since it can eat away at the value of your savings.
  • Certificates of deposit (CDs) are considered very safe investments, but they may not keep up with inflation.
  • U.S. Treasuries are also considered reliable and are often used to store value during a downturn.
  • Municipal bonds, corporate bonds, and bond funds have their own advantages and disadvantages, which should be considered carefully.

Inflation Risk

One key factor to consider when pondering relatively safer assets is inflation. This is when the prices of goods and services go up—or the value of the dollar and what it can purchase falls. Even though inflation has been low in recent years, it can still rob you of your savings, and it has started to increase a bit recently.

Therefore, your portfolio will need to grow at least above the rate of inflation to continue to have the purchasing power that you will need in retirement. In today’s economy, bank savings accounts earn quite a bit less than 1% each year, so they are not actually a safe hedge against inflation. They may preserve capital, but you can still lose purchasing power in the long term.

Bank savings accounts are good for short-term cash needs in the next year or two, but you should look to other relatively safe options for the rest of your portfolio.

Luckily, there are alternatives. Let’s take a look at the top four safe investments that will allow you to sleep at night but still protect your portfolio from inflation.

Certificates of Deposit (CDs) 

Banks offer certificates of deposit (CDs) and are insured by the Federal Deposit Insurance Corp. (FDIC), which makes them just as safe as your savings account. However, you must leave your funds in the account anywhere from three months to 60 months; withdrawing them before that will cost you a penalty.

Some CDs are offered through brokerage companies, but the FDIC likely does not insure them. Interest rates vary based on the time that you must leave the money in the account and the dollar amount that you have on deposit. To help save you time, Investopedia compiles its own list of the best CD rates. While these investments are insured, they may not earn enough interest to serve as a hedge against inflation.


Bank accounts and certificates of deposit (CDs) are safe ways to store cash, but they will often lose value due to inflation. Bonds, stocks, and mutual funds are much more likely to beat inflation over the long run.

U.S. Government Bills, Notes, or Bonds 

U.S. government bills, notes, and bonds, also known as Treasuries, are considered the safest investments in the world and are backed by the government. Brokers sell these investments in $100 increments, or you can buy them yourself at TreasuryDirect. 

Treasury Bills

These mature in four weeks to one year. They are sold at a discount to their face value, and then you are paid face value at full maturity. Treasury bills pay higher interest rates for longer maturity dates, so it’s worth getting 52-week bills if you plan on holding them for some time. Interest on Treasury bills is exempt from state and local taxes, but you still have to pay federal income tax.

Treasury Notes

These range from two to 10 years in length. They pay interest every six months that you hold them. They can be sold at a price equal to, less than, or greater than their face value, depending on demand. Notes with a higher interest rate will likely have more demand, so their price will probably be greater than their face value.

Treasury Bonds

These mature in 20 or 30 years and pay interest every six months that you hold them. While the interest rate is guaranteed, the purchase price goes up and down, and you can take a significant loss if you need to sell them before maturity.

U.S. Treasury Inflation-Protected Securities (TIPS) are a great way to have the safety of a government bond and be protected against the risk of inflation at the same time.

Municipal Bonds 

Municipal bonds are tax free, making them a great option if you’re investing outside of a tax-advantaged retirement plan. State and local governments sell municipal bonds to build local infrastructure and other projects for the public good. Their being safe and tax free can be a great bonus for any savings that you have outside an individual retirement account (IRA), 401(k), or similar retirement investment.

They are not a good option for tax-deferred retirement accounts because they earn lower interest rates than other types of bonds, and you don’t need a tax-free investment for qualified retirement accounts. Be careful, though—always check the ratings before buying municipal bonds, as some are safer than others. BondsOnline is an excellent research resource.

Bond Mutual Funds 

Bond mutual funds can be an excellent alternative to buying bonds directly. Relatively speaking, bond mutual funds have among the lowest risk in the wide universe of mutual funds.

As with any mutual fund, you purchase the number of shares that you want, and a professional money manager researches the best bonds from those included in the fund’s portfolio. The three types of bond funds considered safest are government bond funds, municipal bond funds, and short-term corporate bond funds.

What Are the Safest Investments With the Greatest Return?

Typically, the highest returns are also associated with the riskiest investments. AAA-rated bonds are considered to be among the safest investments, but they also have the lowest yields. On the opposite end, stocks have higher risks and higher returns. However, you can reduce your risk exposure by investing in stock exchange-traded funds (ETFs).

What Are the Safest Stocks?

The least risky stocks tend to be those of large, mature companies with stable growth and profitability. Sometimes called blue chips, these stocks also often pay dividends for those seeking to generate income from their portfolios.

What Is the Safest Investment During a Recession?

Short-term U.S. Treasuries are considered to be among the safest investments during a recession, because of the high credit rating of the federal government. Since the probability of a default is nearly inconceivable to most investors, Treasury bonds are considered reliable for storing value even in times of great uncertainty.

What Is the Safest Investment for Short-Term Investing?

Short maturity bonds, money market funds, and certificates of deposit (CDs) with short maturities are good options for short-term investing, as they can mature in several months rather than years. However, they may not hold value against inflation, so it would be wise to look for more permanent investments if you are investing for longer periods of time.

What Are the Safest Investments for a 401(k)?

A number of factors should be considered for 401(k) investments, such as risk tolerance, age, and time to retirement. The typical advice is to invest aggressively when starting out and move to less risky assets as one approaches retirement. The most aggressive assets are stocks, while the safest ones are bonds.

One strategy for a retirement account is to use a target-date fund that becomes progressively more conservative automatically as your retirement date approaches.

The Bottom Line

Once you get to retirement age, preserving your portfolio becomes a critical issue—but you can overdo it. Putting all your funds in an FDIC-insured bank savings account will not earn you enough money to keep up with inflation. Other slightly riskier investments can minimize the loss of your portfolio to inflation but still offer little chance for growth. A portfolio that balances safety and growth is always best.

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. Social Security Administration. “Retirement Information for Medicare Beneficiaries,” Page 1.

  2. Social Security Administration. “Actuarial Life Table.”

  3. Federal Deposit Insurance Corporation (FDIC). "Are My Deposit Accounts Insured by the FDIC?"

  4. U.S. Securities and Exchange and Commission, "Certificates of Deposit (CDs)."

  5. TreasuryDirect. “Treasury Bills.”

  6. TreasuryDirect. “Treasury Bills: Tax Considerations.”

  7. Internal Revenue Service. “Topic No. 403 Interest Received.”

  8. TreasuryDirect. “Treasury Notes.”

  9. TreasuryDirect. “Treasury Bonds.”

  10. TreasuryDirect. "Treasury Inflation-Protected Securities (TIPS)."

  11. U.S. Securities and Exchange Commission, “Municipal Bonds.”

Take the Next Step to Invest
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.