Where should you keep your money after retirement?

The longer you leave your retirement funds in interest-baring accounts, the more money you'll have.
The longer you leave your retirement funds in interest-baring accounts, the more money you'll have.
©iStockphoto.com/Joe Belanger

Retirement is supposed to be restful, isn't it? But these days, the very idea of retiring is causing a lot of headaches. Many people are holding off on retirement much longer than they originally planned, since the turbulent stock market has meant their savings have taken a hit. So once they do actually get to the point where they're financially secure enough to retire, retirees want to make sure that security sticks around.

If you're in the same boat, you're probably wondering what your options are. Sure, it's tempting to just stick your money under the mattress where it's safe and sound. Given the economic problems we've had in the last few years, who could blame you? The trouble is, squirreling cash away isn't actually that safe. There are a couple of reasons for this. First, most home insurers only cover a small amount of cash (in the $200 range) in the event of, say, a house fire [source: Homeowners Insurance]. Hopefully your retirement savings add up to more than that, so you'll need to find some place a lot less vulnerable to store your funds. The second reason it's not a good idea is that your money doesn't grow. During the span of your retirement, the overall economy will experience inflation, meaning that any money you've put in a shoe box won't be worth as much a few years down the road. This is why it's important to choose your egg's nest wisely; a competitive interest rate can help counteract any loss of value your original savings experience [source: Bold].

No matter what you decide to do with your money once you retire, there are a couple of things to bear in mind. First: make sure you can actually access your money if you need to do so. There's a certain amount of unpredictability about retirement, particularly regarding health care, and you don't want to be stuck without cash because your money is too hard to reach. Second, make sure someone else you trust (whether that's a grown child, another relative or close friend) has the appropriate power of attorney to access funds in the event of an emergency. Go over your financial plans with that person sooner rather than later; they need to know exactly who to talk to, where your money is and how to access it. You'll have peace of mind knowing that even if you're unable to make financial decisions, your money is being well cared for [source: White].

There are lots of options out there, so where's the best place to keep your retirement savings? Check out the next page to find out.

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