Smart Investing Strategies for Octogenarians: What Should an 80-Year-Old Invest In?

When you get to be 80 years old, you need to rethink how you invest. Gone are the days of aggressive growth portfolios and risky investments. But that doesn’t mean you should let your money sit there! As someone who has helped many seniors with their money in their later years, I think there’s a great balance between growth and preservation that’s perfect for those over the age of 80.

Understanding Investment Goals in Your 80s

First things first – why should an 80-year-old even consider investing? It’s a valid question. Many folks think investing is only for younger people with decades ahead of them. But here’s the truth: with Americans living longer than ever before, even 80-year-olds need to plan for potentially 10, 15, or more years ahead!

A Harvard researcher that Milestone Money talked about said, “the first person to live to be 150 years old may have already been born.” “You may not be planning to live that long, but it’s clear that “longevity risk,” or running out of money, is a real worry even for people in their 80s.

Your primary investment goals at this age typically include:

• Generating reliable income to cover living expenses
• Preserving capital while hedging against inflation
• Simplifying financial affairs for easier management
• Planning for potential healthcare costs
• Leaving a legacy for loved ones if desired

The Right Investment Mix for Octogenarians

1. You Never Outgrow the Need for Some Growth

The traditional rule of thumb suggests that your stock allocation should equal 100 minus your age. This would mean 80-year-olds should have just 20% in stocks. However this rule may be outdated given longer life expectancies and inflation concerns.

Many financial experts now say that even in your 80s, you should still have some equity exposure. As of 2018, TheMoneyKnowHow data shows that the average portfolio for someone in their 80s still has about $196,042 in U.S. S. stocks and $24,795 in international stocks. That’s significant!.

2. Focus on Income-Producing Investments

When you’re in your 80s, investments that give you a steady income become more important. Here are some ideal options:

High-Yield Savings Accounts

These offer higher interest than traditional accounts and are FDIC-insured up to $250,000. While returns are modest (around 4% annually according to TheSeniorList), they’re virtually risk-free.

For example, a $25,000 deposit in a high-yield savings account at 0.40% APY would generate about $504 in interest over five years – not spectacular, but safe and accessible.

Certificates of Deposit (CDs)

CDs offer slightly higher returns than savings accounts in exchange for leaving your money untouched for a set period. They’re also FDIC-insured up to $250,000, making them another ultra-safe option.

The main drawback? Early withdrawal penalties if you need your money before the CD matures. But if you have funds you won’t need immediately, CDs can provide better returns than standard savings accounts.

Treasury Securities

Treasury bills, notes, bonds, and TIPS (Treasury Inflation-Protected Securities) are government-backed securities that offer guaranteed returns.

• Treasury bills: Short-term investments (from a few days to several weeks)
• Treasury notes and bonds: Longer-term investments (up to 30 years) with interest paid every six months
• TIPS: Specifically designed to protect against inflation

While these typically offer lower returns than stocks, they’re backed by the “full faith and credit” of the U.S. government, making them extremely safe.

Dividend-Paying Stocks

Well-established companies with long histories of paying dividends can provide both income and modest growth. Companies like Procter & Gamble, Johnson & Johnson, and utilities often have decades-long records of consistent dividend payments.

According to TheSeniorList, dividend-paying stocks provide “an opportunity for shareholders to receive income even when the stock market isn’t doing well.”

3. Simplify Your Financial Affairs

As Milestone Money wisely points out, “Even for 80-somethings who are well informed and on top of their investments, it’s a good idea to simplify your arrangements as much as possible.”

Over the years, most people accumulate multiple accounts across different institutions. In your 80s, consolidating these accounts can make management much easier for both you and any family members who might be helping.

Consider working with a fiduciary financial advisor who can help create a simplified financial structure while maintaining appropriate diversification.

Safe Investment Options with Reasonable Returns

Let’s look at some specific investment vehicles that balance safety and returns:

Fixed Annuities

These are contracts with insurance companies that provide guaranteed income for a specified period or for life. They can offer peace of mind through predictable income streams.

Potential drawbacks include early withdrawal penalties and sometimes high fees, so be sure to understand the terms before committing.

Money Market Accounts

Similar to savings accounts but typically offering slightly higher interest rates, money market accounts are FDIC-insured and provide easy access to your funds for emergencies. They usually require higher minimum balances than regular savings accounts.

Low-Risk ETFs

Exchange-Traded Funds (ETFs) can provide diversification with lower risk than individual stocks. Some conservative ETFs worth considering, according to TheMoneyKnowHow, include:

• Vanguard FTSE 100 ETF (tracks UK’s largest companies)
• iShares $ Treasury 1-3 Years ETF (invests in short-term US Treasury bonds)
• SPDR World Energy ETF (tracks global energy companies)

Balanced Mutual Funds

Funds specifically designed for retirees often maintain a conservative mix of stocks and bonds. These can provide modest growth while limiting downside risk.

Practical Tips for 80-Year-Old Investors

1. Get Trusted Help

As Milestone Money emphasizes, “One of the best ways to simplify your finances while exercising more efficient management is to get a trusted family member or friend more involved with your financial affairs.”

This doesn’t mean surrendering control, but rather creating transparency with someone you trust. This person can also help protect you against potential financial scams – an important consideration since “elder financial abuse victimized more than 92,000 people in 2021, and from 2017 to 2021, fraud accounted for nearly $1.7 billion in losses to older Americans.”

2. Keep Some Money Easily Accessible

According to TheMoneyKnowHow, it may be reasonable for seniors to hold cash to cover “one to two years of living expenses (beyond predictable Social Security and pension income) in addition to your daily use account.”

This ensures you’re not forced to sell investments during market downturns to cover basic expenses.

3. Review Important Documents

Make sure your estate planning documents are up-to-date, including:

• Will
• Healthcare directives
• Powers of attorney
• Beneficiary designations

Also ensure that trusted family members know where these documents are and how to access them if needed.

4. Beware of Investment Scams

Unfortunately, seniors are often targeted by financial scammers. Be wary of:

• “Guaranteed” high returns with no risk
• Pressure to invest immediately
• Unregistered financial professionals
• Complex investment strategies you don’t fully understand

Real-World Example of an 80-Year-Old’s Portfolio

Let’s look at what a balanced portfolio might look like for an 80-year-old with $500,000 in investable assets:

• Cash/Emergency Fund (15%): $75,000 in high-yield savings accounts
• Fixed Income (60%):
  • $150,000 in Treasury bonds and TIPS
  • $75,000 in short-term CDs
  • $75,000 in high-quality corporate bonds
• Equities (25%):
  • $75,000 in dividend-paying blue-chip stocks
  • $50,000 in conservative ETFs

This allocation provides a good balance of income, safety, and modest growth potential while keeping things relatively simple to manage.

Final Thoughts

Investing in your 80s isn’t about hitting home runs – it’s about safety, income, and simplification. Your financial strategy should reflect the reality of your age while still acknowledging that you may have many good years ahead.

Remember the old joke about the elderly man who tells his financial advisor, “at my age, I don’t even buy green bananas”? While there’s wisdom in that humor, it’s also true that proper financial planning can help ensure security and comfort throughout your 80s and beyond.

By focusing on safe investments with reasonable returns, simplifying your financial affairs, and getting trusted help when needed, you can create a financial strategy that serves you well in your golden years.

Have you adjusted your investment strategy since turning 80? What’s worked best for you? I’d love to hear your experiences in the comments below!