In financial downturns everyone tends to tighten their own budgets and that also includes retirees. People notice they are all of a sudden preserving cash. In the 2009 recession, the United States savings rate jumped to 6% when it has been near 0% in the several years prior. In fact you might find you're really end up with retirement savings after paying your regular expenditures. So exactly where should you put this 'extra' funds as a retiree?
You may tend to just place the additional retirement savings in a bank account. However that makes your money exposed to inflation and not able to take part in market upturns. Its earnings will also be taxed yearly and after inflation - you may also place these retirement savings under the bed mattress.
Better to make these retirement savings function to ensure more for you later on. At the age of sixty five you statistically have 21 years of remaining life span. Long before that time elapses, both inflation and economic fluctuations (which includes upturns) will have an effect on your holdings.
Supposing that you've stored anywhere from 1 to 2 years of easy-to-access unexpected emergency cash, you should put your 'extra' retirement savings into investments of a a bit longer time horizon. Here, you're looking for equity growth - both to offset the effects of inflation and further capitalize on the eventual rebound of the economic climate and the stock market.
Make sure to diversify your retirement savings among a range of equity portfolios. Or, if you would like to purchase individual shares, the Dow Dividend Strategy is a great strategy for traditional traders. (Although the stocks in this program are all regarded as 'US' companies, they derive 50% of their sales overseas therefore offering immediate international exposure). Although you might invest some of your retirement savings in mutual funds or ETFs that cater to large capitalization stocks, you should attempt to include real estate investments, international shares, emerging markets, and smaller U.S. shares.
These investments will reside in your 'taxable' accounts since they originate from investment income rather than work earnings (e.g. 401k or IRA). And as equity-based investments, their annual earnings should be small, because you are investing for 'increase in principal'. They might not 'move' for some time, but remember, you have already demonstrated you do not need this cash because it is retirement savings you did not have in your initial monetary strategy.
Consider this funds outside your normal portfolio arranged according to your 'risk' profile and earnings needs. By doing this you can afford to risk the 'wait' needed for these retirement savings to bloom.