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Related topics: 401k, retirement savings, IRA, Social Security, insurance

The first baby boomer started collecting Social Security payments in late 2007, signaling a long and powerful wave of Americans born from 1946 to 1964 marching toward retirement.

As a cohort with more concentrated spending power than any other, baby boomers can't help but significantly impact the economy and the investment landscape.

If you are approaching retirement age, the choices you make will affect your finances for 20 years or more, as the average life expectancy for baby boomers is 83 years and climbing.

Here are 10 investments -- some specific types of securities or other assets, others account vehicles -- you should consider:

Treasurys

Any consideration of high-quality retirement investments could start and end here. Treasurys are the ultimate in safe, reliable investing. Their yields are often considered the benchmark of safety.

The U.S. government has never defaulted on a Treasury bond, making them a beacon for investors all over the world. However you acquire them -- via mutual funds, exchange-traded funds or the purchase of individual bonds --Treasurys should have a prominent weighting in your investment portfolio. For the majority of investors over 60, capital preservation is more important than capital appreciation. Treasurys preserve what you've got while providing a steady stream of income.

Similarly, corporate and municipal bonds are solid investments, though the default rates are higher. Research may be required by the investor to evaluate their suitability.

Certificates of deposit

Certificates of deposit often carry a higher yield than Treasurys with comparable maturities. With CDs, you have the feel-good factor of giving your money to a bank, and your savings are insured (up to $250,000 per bank) by the Federal Deposit Insurance Corp.

The Certificate of Deposit Account Registry Service (CDARS) allows savers to deposit more than the FDIC limit at participating banks. Other banks in the network will effectively insure portions of your investment by creating CDs for you at their banks. All of your money stays in one place (and so does your personal information) while you get FDIC insurance on the entire deposit. And at tax time, there's just one 1099 tax form to file.

If you wish to hold several individual CDs, consider using a laddering strategy, with which you spread maturity dates evenly over three to five years. This way, you don't have all your money committed at one interest rate, and you can capitalize when higher rates become available.

Unit investment trusts

Unit investment trusts often come with little fanfare, and you won't see them advertised as heavily as mutual funds or other investment products. The reason is that they're generally not as profitable for the people creating and managing them. And that's great news for investors in the know.

UITs can hold either stocks or bonds. Most trusts focus on either capital appreciation or generation of a consistent income stream. The key difference between mutual funds and UITs is that a trust's portfolio is established once, and remains fixed for the life of the investment. No changes are made to the portfolio after the initial public offering.

With debt UITs, investors receive a pro-rata cash payout when the maturing bond is redeemed.

While investors know exactly what they're getting upfront, unit trusts also come with a big tax advantage over mutual funds. You're responsible only for the capital gains you earn -- you'll never be faced with paying a capital-gains tax on somebody else's money, as often happens with mutual funds.

Most UITs have good liquidity, and can be traded daily at or near net asset value. They can be found at most of the major fund companies or through a brokerage.

Managed subaccount with a registered investment adviser

Putting at least a fair portion of your liquid net worth into the hands of a trusted investment professional is the single best choice for many people. There are enough professional certifications within the world of investing to make anybody's head spin, but a good registered investment advisory company should employ either chartered financial analysts or certified financial planners.

Registered investment advisers earn fees (typically as a percentage of assets) for the service of creating and maintaining portfolios custom-suited to individual investors. They are registered with the Securities and Exchange Commission, and must adhere to strict reporting and presentation standards to ensure fairness to investors.

The minimum investment required to get started used to be quite high, but RIAs are no longer just for the high-net-worth group. Thanks to cost savings from electronic trading and other market efficiencies, RIAs can take on new clients with as little as $100,000, in some cases.

This option provides great tax advantages, in that a professional with knowledge of your tax situation can manage your gains and losses for the year. Also, it's nice to have your portfolio managed by a seasoned pro -- someone who can guide financial events that will shape your life in the coming decades.

Fees vary, but this competitive field can be accessed for about 1% per year, roughly the same as a mutual fund.

Life-cycle funds

Life-cycle funds are meant to change over time, becoming more risk-averse as an investor ages. Almost all life-cycle funds specify a target date in their titles; you'll want to read the fund's prospectus to verify the significance of that date.

For example, the Vanguard Target Retirement 2025 (VTTVX) fund structures its asset allocation for investors who will hit retirement age from 2023 to 2027.

Life-cycle funds are a solid choice for investors who want to buy a savings instrument and hold it for many years. On Day 1, the fund will likely have its highest risk level; over time, it will increasingly focus on income generation and capital appreciation by increasing its reliance on fixed-income assets while scaling back exposure to stocks.

Many life-cycle funds can be purchased with no sales loads, and many offer competitively low expense ratios. Some funds will hold sets of other mutual funds or ETFs, while others have individual securities selected by a fund manager.

Dividend-reinvestment plans

Dividend-reinvestment plans (known as DRIPs) allow investors to have their quarterly dividend checks automatically reinvested into a single dividend-paying company. Hundreds of companies offer these plans, including most of the Dow Jones Industrial Average ($INDU).

DRIP programs may also be offered by a third party, such as a broker or a transfer agent. The main advantages of DRIPs are:

  • The ability to automatically dollar-cost-average into a stock.
  • Savings on stock commissions. In most cases there are no trading fees.
  • The option to purchase fractional shares and buy shares at below-market prices.
  • The ability to get started for as little as $10 and add money over time.

DRIP plans need to be balanced with other investments, as they don't do much to diversify a portfolio. But they are generally a cheap way to get increasing exposure to top-notch companies -- the kinds that have historically provided the best returns to investors.

Real estate

The purchase of a second property or rental property or a move into a smaller, more efficient home following the sale of a primary dwelling can provide asset diversification, tax savings or a place to spend some extended vacation time.

Real-estate decisions are not to be taken lightly, and most investors should strongly consider consulting advisers before pulling the trigger on any transaction. Your whole financial picture should be considered, including your net-worth diversification, your liquidity needs and your personal tax situation.

But many people enjoy the prospect of moving into a smaller home, possibly in a new area and with modern energy-saving and green amenities. Others like to have a property they can rent out, using the rental income to pay all or most of the mortgage.

Variable annuity

As you approach and reach the retirement phase of life, the value of insurance becomes ever clearer. While the traditional whole-life policy has not been completely wiped out of the marketplace, it competes with newer products, such as the variable annuity, which allows investors to hold what is essentially an insurance policy with the option of investing cash balances in stocks and bonds.

This provides the opportunity for gains on the cash balances above inflation, a key component to keeping the value of your insurance over time. It's best to be stingy when selecting a variable annuity, however, as fees vary widely. Be sure to understand all costs, including annual fees, underlying investment fees and both front- and back-end sales fees.

Most financial planners feel that variable annuities are best suited to people who have some concern about themselves or their beneficiaries outliving their savings. With a variable annuity, you relinquish some potential investment gains for the safety of insurance.

Individual retirement accounts

Individual retirement accounts are the cornerstone of the modern retirement portfolio. If you've been investing for many years, chances are high that you've already got a well-funded IRA.

All of your 401k assets should end up in either a traditional or a Roth IRA shortly after you head out the door of your last job. And if you're over 50, you can add to your account over and above the standard annual contribution limits. IRAs eliminate capital-gains taxes and can help reduce future tax bills.

When transferring assets to a Roth IRA, you'll have to take a short-term hit by paying income taxes, but you'll gain the huge advantage of receiving tax-free income for every penny of it down the road.

When planning moves to and from IRA accounts, it is crucial either to know all the rules or to consult a tax pro. You may find it easier to move chunks of money over several years to spread out your tax bill. But if you hope to be drawing down on your IRA for 20 years or more, the tax savings in the future make the Roth the best option.

Assets in your IRA should reflect your overall asset allocation. For many people, the IRA already represents the bulk of their net worth, so proper allocation is all-important. Most standard securities, like stocks, bonds and funds, can be bought inside an IRA account, and the IRA itself can be maintained for minimal fees at numerous financial institutions.

Finally, IRA assets can be passed on through your estate so that your heirs can continue to benefit from the power of compounding.

The wild card

Good investment ideas often involve being creative and knowing what you love to do. Anything you enjoy can potentially become a good investment opportunity, such as:

  • Paintings and fine arts.
  • Classic cars.
  • Sports memorabilia.
  • Coins and collectibles.
  • Starting a business.

If you have an interest (preferably combined with a fair amount of knowledge) in a particular area, you should feel empowered to take it as far as you like. After all, we live in an increasingly age-defying world, where passions and energies aren't just for the under-40 crowd.

Any of these, and many others, could make for a fine investment, though it's probably best to dedicate a small percentage (5% to 10%) of your net worth to such alternatives and to understand their limits on liquidity and other potential liabilities.