What ETFs are the best for those in or near retirement?

As the baby boomer generation ages, Americans are retiring at a record pace. Exchange Traded Fund (ETF) It has become a popular way for retirees to invest in a way that suits their risk tolerance and diversification needs.

According to a recent report by the Lifetime Income Alliance, approximately 4.1 million Americans are expected to turn 65 on an annual basis from 2024 to 2025. As a result, the number of Americans turning 65 every day has increased from approximately 10,000 to more than 20,000 over the past decade. This year there are 11,200 people.

ETFs range from stock ETFs optimized for dividend yield to interest-producing bond ETFs on government and corporate bonds, to those modeled after broader indexes such as the S&P 500, and even those modeled after international indexes. Provides investors with access to a variety of investment topics of interest to retirees. exposure. Some may include hedging strategies to protect against downside risk.

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“Investing is personal, and the 'best' ETF for a retiree or near-retirement will vary greatly depending on that person's circumstances. Retirees or near-retirees may need to consider their overall allocation “They need to assess their situation in terms of the period of withdrawal or increase,' think about their assets and what level of risk they are comfortable with,'' says CFP and founder of Mitrin Financial said Lawrence Sprung.

“Investors with higher risk levels and longer time horizons will participate in more investments.” Growth-oriented ETF. On the other hand, investors with lower risk tolerance who currently need returns from these assets will allocate their portfolios more towards income-oriented investments,'' Sprung added. Another. “

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ETFs can be broadly diversified or narrowly concentrated in specific parts of the market. (Angela Weiss/AFP for Getty Images/Getty Images)

Fallon Daugs, CEO of Harrison Wallace Financial Group, said some ETFs offer downside risk protection for retirees and future retirees.

“These are often referred to as Buffered ETF. These typically track stock indexes and offer various downside protections in the event of market downturns,” he said. “But it provides little benefit to individuals.” If the economy worsens, they will parachute down. ”

“Another option to consider is an ETF that invests in dividend-producing stocks. You can typically build a portfolio that allows you to earn money through dividends and capture growth potential, regardless of stock price performance. , which acts as an attractive way to get an offer, “even if the stock price declines, there is a chance that you will profit in some way,'' Daugs added.

ETFs help investors diversify their portfolios by targeting specific types of assets more efficiently. (license/image)

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Ted Jenkin, co-founder and consultant at oXYGen Financial, said ETFs that pay dividends or interest can be a smart investment for retirees who need income during their golden years.

“SPDR Portfolio S&P 500 High Dividend ETF (SPYD), Vanguard Dividend Growth Index Fund ETF Shares (VIG), and iShares Select Dividend ETF (DVY) are just a few to watch,” he said.

Jared Levy, chief market strategist at Peak American Financial, said investors generally have moved from “growth-first to protection-first,” so they need to “become very accurate the closer you get to retirement.” He said there is. Levy added: “It's important to have an all-weather portfolio that not only balances your risk tolerance, but also maintains correlations even if things start to break down.”

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He said one of his firm's all-weather portfolios features a protected S&P 500 ETF (BUFR) in addition to a combination of corporate and government bond ETFs. Bitcoin, gold, precious metals ETFs, small-cap ETFs based on the Russell 2000, and other investment products.