How to Invest $100,000 for Retirement

When you have a lump sum of investable cash on the line, knowing where to steer that money for maximum retirement income can be a tough decision, especially when the stock market is roiling and nobody knows what happens next. When investing for retirement, you want to grow your savings over time, but also protect yourself from losses as you get closer to retirement.

“It’s easy to succumb to greed when investing a lump sum all at once,” says Asher Rogovy, chief investment officer at Magnifina in New York City. “With the pressure of cash burning a hole in the pocket, it’s important not to rush through due diligence, research and analysis. Investors that aren’t up for the task should contact a professional investment advisor for assistance.”

Consider these places to invest $100,000 for retirement:

— Index funds.

— Bonds.

— Annuities.

— Real estate investment trusts.

— Series I savings bonds.

— Individual retirement accounts.

Index funds

You might want to put $100,000 to work for you in the financial markets. Investment experts often advise sticking to what works and keeping things uncomplicated. “The best strategy for most investors is to simply invest in a broad index fund, either mutual funds or exchange-traded funds, that tracks the performance of the market,” says Robert R. Johnson, a finance professor at the Heider College of Business at Creighton University. “Exchange-traded funds and exchange-traded notes that track broad market indexes such as the S&P 500 index or the Dow Jones Industrial Average are wholly appropriate for most investors looking to put money into the markets.”

For growth-minded investors with a longer time horizon, the stock market offers good opportunities to successfully invest. “Investors should remember that asset prices don’t simply reflect current economic conditions, but expected economic conditions,” Johnson says. “That is, the recent drop in the stock market is largely due to expected future economic weakness.”

The biggest blunder when steering large lump sums of cash into the financial markets is chasing returns and trying to time the market. “Timing the market is fool’s gold,” Johnson says.


If the stock market is too volatile for your risk tolerance and you just can’t trust it with $100,000 right now, consider bonds. “For a long-term investor who believes the U.S. may be entering a recession and doesn’t want to allocate all of the money to stocks right off the bat, six-month Treasury bills are a good place to park a portion of the $100,000,” says Laurie Itkin, a financial advisor at Coastwise Capital Group in La Jolla, California. “It’s a way to get well over a 4% annualized yield risk-free without committing for longer than six months.”

Bonds provide a measure of flexibility if you might need the funds before retirement or want to change your investment strategy later. “Once the bonds have matured, you can reassess the environment,” Itkin says.

[Read: New 401(k) Contribution Limits for 2022.]


If you are close to retirement and want to set up an income stream, consider an annuity. In exchange for a lump sum payment, annuities can provide a steady stream of payments throughout retirement. For example, consider a woman who is in good health and expects to live into her 90s, but only has Social Security as her sole source of guaranteed income. “In this instance, she may want to turn that $100,000 into a ‘personal pension’ of guaranteed monthly income that she cannot outlive,” says Tim Adams, a certified public accountant and retirement risk specialist at 320 Financial Group in Dayton, Ohio. But keep in mind that funds invested in an annuity can be difficult to access for emergencies and often can’t be left to heirs.

Real estate investment trusts

Real estate can be a good landing spot for $100,000. “Real estate investment trusts might be the best bet here,” says Melanie Hanson, editor in chief at EDI Refinance, in Iowa City, Iowa. “Real estate values remain high and have a higher floor than most other kinds of securities.”

Rental real estate also has the advantage of being highly responsive to inflation, as landlords raise rents to keep up with inflation, and these rents boost your returns, Hanson notes. “For a long-term retirement plan, it’s probably best to mix things like REITs and index funds with a few individual stocks and riskier investments to give yourself some more upside.”

Series I savings bonds

I bonds promise a rate of return that is guaranteed to keep up with inflation. “I bonds can earn interest for up to 30 years, making them appealing for investors in their 30s or mid-40s,” says Rich Watson, chief executive officer at Trade Hub, a real-time stock alerts platform in Orange County, California, “Plus, there’s no penalty for cashing in the bonds five years after the purchase, making it a suitable investment for those people in their 50s.”

[See: 10 Reasons to Save for Retirement in a Roth IRA.]

Individual retirement accounts

While annual contribution limits are low, it could be useful to put at least some of your funds into a traditional or Roth IRA for the tax benefits. “If you’re trading in a Roth IRA, you should be investing in dividend reinvestments, as your gains will compound over time,” Watson says. “If you’re investing in a non-Roth account, you may want to look into stock market sector hunting or broad index ETFs.”

More from U.S. News

How to Reduce Your Tax Bill by Saving for Retirement

How to Take Advantage of 401(k) Catch-Up Contributions

12 Ways to Avoid the IRA Early Withdrawal Penalty

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