Worst (And Best) Places People Are Stashing Money For Retirement
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If you're saving for retirement in the wrong place, you could be missing out on millions of dollars. So what are the best places for growing your nest egg? Well, a site called Money Talks News posted an article called 10 Places Americans Are Stashing Money Away for Retirement. And this article is not just their opinion. They're breaking down the numbers from a recent study that asked about 2,400 retired adults where they currently had their retirement savings. And Money Talks News then wrote this article riddled with affiliate links.

And then I took that article and I made this video. And that's how the world works. Oh, is that how it works? But just because these retired people are doing it doesn't make it a good idea. And you should be investing with confidence. So in today's video, we'll take a gander at this article and I'll tell you which of these 10 things are smart money moves and which ones are as dumb as the rock. I mean, a rock. Please don't hurt me, Dwayne.

And before we jump in, hit those like and subscribe buttons so we can keep making great personal finance videos with mildly funny references to Dwayne Johnson. What can I say except you're welcome?

Don't find me, Disney. Don't hurt me. I'm way more scared of you. You should be. So let's get into the article and this study from Transamerica Center for Retirement Studies. So 2,400 retired adults. Here's the list in order from least likely to most likely to have your retirement money stashed away. Sitting at number 10, we've got cryptocurrency. Respondents with this type of retirement savings slash investment...

So 2% of retirees said, I've got my money in crypto.

All right. And they go on to say it's red hot. Bitcoin surged in value. Here's the deal. Cryptocurrency is speculation. It's not technically investing. And if you ask any Bitcoin bro, they'll tell you it's a store of value. Okay. Got it. Would I trust my retirement in crypto? Not a chance. Do you want to put some fun money in there once you're already investing 15% into retirement accounts? No.

Be my guest. Next up on the list, we've got health savings account. This is interesting. Respondents with this type of retirement savings came out to 4% of retired people. Now, this is a good one. A lot of people don't know that with a health savings account, you can actually invest

in mutual funds and index funds, and that money can grow tax-free. And of course, you can always use it tax-free for medical expenses, but once you hit 65, it kind of becomes like an extra traditional 401k. So you will have to pay taxes on that money if you use it for something other than medical, but it's kind of a bonus way to invest a good chunk of change.

into retirement. Love this one. Number eight on the list with 9% of retired people investing here, real estate other than primary residence. So this could be, I'm assuming...

a vacation home or an investment property that they rent out or do short-term rental like Airbnb? This one could be good. I'm a big fan of real estate, but here's the giant tiny caveat, only when it's paid for. You heard that right. If you're going to get into investment real estate, do it with cash, at the speed of cash. And if you can't do it,

don't do it. Don't enter your retirement highly leveraged with a bunch of mortgages that you claim other people are just going to pay it for. No, that's not how real life works. Okay. Look up the horror stories from all the times where the tenant didn't pay or had a big issue and they had to pay for this giant repair and it's long distance. There can be a lot of headaches with this. That being said, if you do it in cash, it can be a great return on your investment.

And think about it this way. In retirement, I'm looking to get rid of risk, not add more to my life. And when you have investment properties with mortgages attached, you're adding more risk to your life. So simplify, simplify, simplify. I can't tell you how many calls we've taken on the Ramsey Show where someone calls in, in retirement, about to go into retirement, and they're going, should I sell this place? It was a nightmare. I thought it

It was going to be this amazing investment and give me a ton of money. And the juice just ain't worth the squeeze. Before we move on to the next place people are saving for retirement, I want to tell you how you might be able to save money on your phone plan. And that's by switching to Tello, a sponsor of today's episode. Tello has crazy affordable plans that get you the same reliable coverage and features as the big guys, but with pricing as low as five bucks a month. And if you never want to worry about data limits, the unlimited everything plan is just 25 bucks a month.

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Okay, back to the article. Number seven, annuities coming in at 19% of retired people. I want to see what Money Talks News has to say about these. They say, is this a good investment or not? It depends. Here's my hotter take than that.

I'm not a fan of annuities. I think it makes sense for almost zero people. Here's the deal with annuities. They're contracts with insurance companies that guarantee a payment. There's a bunch of types. You got fixed annuities, variable annuities, index annuities. They're complicated. The fees are really high. They're subpar returns. And they prey on people who are scared of market returns. Because what if I'm in retirement and the stock market does this?

It's going to do that. Ride the wave, my friend. Ride it out. Just ride the barrel and get pitted. Don't give away your retirement in fees to annuities. And here's how you know they're not a good idea. They're always pitched in these like three-hour dinners on these cards you get in the mail, like offering a free steak dinner if you sit through a three-hour presentation. That smells an awful lot like timeshare presentations. Coincidence, I think not. So yeah, not a fan. Can't believe 19% of people have their money there, but...

What are you going to boomers going to boom? That's what I say. Next up on the list, we have 401k or similar plan with 28% of retired people stashing their cash in that retirement plan. I love this one. The 401k is the number one spot in our millionaire study. Eight out of 10 said the 401k was the key vehicle for them becoming a millionaire. And this might look different for you. Maybe it's a 403b.

TSP, whatever that retirement plan is that has a tax advantage, take advantage of it. And if it's a Roth 401k or Roth TSP, even better because that money will grow tax-free and you can withdraw it tax-free in retirement. I'm shocked that only 28%, I would imagine it would have been 50, 60% of people have their retirement in a 401k. So I'm a little shocked by this one, but we'll see what beat it.

In the number four spot, we've got brokerage account coming in at 35% of retired people saying they have money in a brokerage account.

This one makes more sense to me. Now, a brokerage account is similar to a retirement account, except that you can invest outside of retirement. So what's the con here? Well, you don't get the tax advantages that you would with a retirement plan. That being said, it can be a great bridge account for folks that are retiring before 59 and a half when they can access those retirement funds without penalty. And a lot of people just beyond their retirement account, if they max it out, they can turn to these brokerage accounts where you're just investing into the stock market.

So here's the deal with these. Don't invest in things like single stocks in a brokerage account. You want to stick to index funds and mutual funds inside of these accounts. And you want to look for low turnover, little taxes so that you can maximize your investment. And also in fourth place in a tie. Wow. Who would have thunk it? This is a hot race, my friends. This suspense is killing me. The IRA.

stands for, save this for trivia night, individual retirement arrangement. I know. And everyone who said account is going to be like, what? I thought it was, it's a rent. Look, Google it. I know. I'm just as shocked as you. This is a great one because if you don't have a retirement plan through your employer, anyone with earned income can open an IRA. And again, retirement

Roth is my favorite version of this because the money's gonna grow tax-free and you can withdraw it tax-free later on in retirement. So this one is less shocking that it's at 35%. Love that this one's in some of the top spots. Only to be beat by one of my least favorite products, the life insurance policy. Now, if you've watched this channel, you know I'm no fan of life insurance

as an investment vehicle. And so it's shocking that 36% of retired people fell for this crappy, crappy product that was sold to them by a shyster, a grifter. You understand me? 'Cause what we're talking about here is whole life. It has a cash value, a permanent life, variable life.

Index Universal, you name it. They're all out there and they're all terrible. What you want to stick to is term life where you can't invest. You just pay a very small price to transfer the risk of you dying onto the insurance company and they'll replace your income if something should happen to you. That's what you should stick with. Not these super crappy permanent life insurance plans, which they just say some people also purchase permanent life insurance. But your money's not...

invested in a term life policy, which makes me think a lot of these people have it in a permanent life policy, in which case, no bueno. No, don't like that.

Here we go. 48% of retired people said that the majority of their retirement savings in their primary home. And this one makes sense. We found in our millionaire study that the average millionaire paid off their home in 10.2 years, and it generally makes up about one third of their entire net worth. So this one makes sense. And I think, I hope Money Talks News is a fan of it.

Thank you.

This one hurts my soul a little bit, and here's why. You don't want to have your retirement in a general bank account making 0% interest. You're not going to keep up with inflation, which, as you know, has been crazy the last few years. You want to have that money invested so it continues to grow so that you don't run out of money in retirement. That's the key here. Look at that. Money Talks News is with me on this one. Putting all your money in a bank actually creates a big risk in retirement. Money kept in the bank account typically does not earn much of a return in inflationary times.

I should have used that in inflationary times like those we are living through right now. Money and savings or checkings will likely lose its purchasing power relatively quickly. So what do you keep in your bank account in retirement? I would keep three to six months of expenses and maybe enough to live on for maybe a quarter or even a year ahead of time, depending on your retirement strategy. Beyond that, leave the money invested in good growth stock mutual funds and index funds. Let that baby ride. So there you have it.

When it comes to investing, stay away from things with low returns and things with high risk and high fees. You want to aim for that Goldilocks middle. Be a porridge crockpot in a world full of get-rich-quick microwaves. Slow and steady wins the race. And sure, there's never zero risk when it comes to investing, but there's a way to do it with more peace and less stress. All you need are a good old boring retirement account like a Company 401k or a Roth IRA.

And as soon as you're financially ready to invest, meaning you're debt-free with an emergency fund, start putting 15% of your household gross income into these tax-advantaged accounts. And then sit back and watch your nest egg grow over time. And if you should find yourself maxing out these retirement accounts, you can move on to other investments like paid-for real estate or that taxable brokerage account and invest in some good index funds. But here's the deal. Retirement accounts are really all you need to build wealth. It's that simple. I

I told you earlier, according to our study of millionaires, the number one investment vehicle to become a millionaire was not Dogecoin or some terrible whole life policy they were pressured into buying from their old college buddy. It was a company 401k plan. So if you want to be wealthy, do what the wealthy do. And be careful who you listen to when it comes to personal finance. Don't make any rash investing decisions based on some ad-filled article you read online or some card you got in the mail pitching some business presentation with free dinner. If you fall for the trends,

you will fall for the traps. And if you wanna learn more about investing, I've got a free investing guide you need to check out. I will drop a link for you in the description below. And if you wanna get a gauge on how you're doing with your retirement savings, check out this video to find out how much you should have in your 401k by age and what you can do to catch up if you're behind. I'll also drop a link in the description below. Thanks for watching. We'll see you next time.