Since many Blue Cross Blue Shield employees are able to enjoy more years in retirement, it’s become imperative for those approaching retirement age to establish reliable streams of income they can count on to cover their living expenses. That’s the aim of investing for income—having enough income, on a consistent basis, that allows you to cover your expenses, so you can help avoid delving into the principal balance of your retirement savings. As a Blue Cross Blue Shield employee, investing for income can come with less risk than the alternative, which is investing for growth through traditional stock market-based investments.

That’s because fixed-income investing is an approach focused on helping you as a Blue Cross Blue Shield employee preserve your capital, so you can use it to generate ongoing income in the form of interest or dividends. This is what makes investing for income such a viable option for Blue Cross Blue Shield employees and retirees who feel more comfortable knowing exactly what their investments will provide for them in the future. So, now that you have a basic understanding of how investing for income can place you on the path to a more reliable retirement outcome than most traditional stock market-based plans can offer, let’s take a look at 11 different ways you can invest for income.

Bonds are one of the most common types of fixed-income investments. They have a fixed interest payment and a fixed amount that has to be repaid at maturity, which is known as the par value. One of the first things that come to mind when people hear about investing in bonds is government bonds. Government bonds are debt securities issued by a government to fund government spending.

They are issued by national governments and can be considered low risk since they’re backed by the government that issues those bonds. For example, one type of debt security issued by the United States and backed by the U.S. Treasury Department includes U.S. Treasury Bonds. U.S. Treasury Bonds are long-term bonds having a maturity between 10 to 30 years. So, what if you, as a Blue Cross Blue Shield employee, are not interested in tying up your money for more than 10 years? Well, that brings us to the second way you can invest for income: U.S. Treasury Notes.

U.S. Treasury Notes are another type of debt security issued by the U.S. government to fund government spending. It also has a stated rate of interest, and interest payments are made semi-annually until maturity. US Treasury notes are issued in two-, three-, five-, seven-, and 10-year terms. As a Blue Cross Blue Shield employee, If you feel that’s still too long of a period to tie up your money, then item #3 on our list might be for you.

U.S. Treasury Bills are short-term debt obligations backed by the U.S. Treasury Department with terms of one year or less. They are offered with maturities of one, three, six, and 12 months. Since these securities come in shorter terms, the interest they offer will tend to be lower than the two other options we just discussed. We believe these are good short-term options for Blue Cross Blue Shield employees and retirees. What if you aren’t interested in U.S. Government bonds? As a Blue Cross Blue Shield employee, perhaps you would like to invest in something local where your money will go towards government projects that will improve or benefit your local area. If that’s the case, then take a look at the next item.

Municipal bonds are debt securities issued by state and local governments to fund public works and usually go towards projects like building or improving parks, roads, bridges, libraries, or other infrastructure. As a Blue Cross Blue Shield employee, municipal bonds are a good way to preserve capital while generating interest. Most municipal bonds are exempt from federal taxes, and some are tax-free at the state and local levels as well.

However, the interest earned on municipal bonds can impact your social benefits and the tax you might be required to pay on those benefits. That’s why it’s important that you, as a Blue Cross Blue Shield employee, work with a financial advisor who is well-versed in the complexities of planning and saving for retirement before investing in these types of securities.

As a Blue Cross Blue Shield employee, it is imperative to understand that corporate bonds are debt securities issued by corporations to raise money to cover ongoing operations, mergers, and acquisitions, or to expand their business. The term corporate bond is usually applied to debt instruments issued by a corporation with maturities of at least one year. Corporate bonds can be classified into two categories. The first is high-grade corporate bonds, otherwise known as investment-grade corporate bonds.

The second category is high-yield corporate bonds or junk bonds. The two distinctions are made based on the amount of risk that the bondholder takes on by investing in those bonds, among other factors. In general, investment-grade corporate bonds will offer a lower rate of interest compared to those in the higher-risk, junk bond category. At TRG, we focus on working with Blue Cross Blue Shield employees to ensure they have the highest possible return while minimizing risk.

Preferred stock is a class of equities, or stocks, that offer investors a fixed dividend and a par value. So, if the market value of the shares drops below the par value, investors will still receive the fixed dividend payment. If that company ever wants to redeem or call those shares, those shares get called back at par value. As a Blue Cross Blue Shield employee, it is important to distinguish the different classes of equities and stocks in order to take a well-informed course of action.

Mortgage Backed Securities (MBS) is an investment that's secured by a collection of mortgages bought by the banks that issued them. MBS receives periodic payments similar to bond interest payments. All of the above are valuable options worth considering for Blue Cross Blue Shield employees and retirees looking to invest for income.

A Business Development Company (BDC) is a type of closed-end fund that makes investments in organizations that are developing or in need of financial help. BDCs can offer high dividend yields and the potential for capital appreciation. Although BDCs do not have a par value, they do have loans to businesses inside their portfolios, and those loans do have a par value.

Many people forget that Certificates of Deposit (CDs) are another type of fixed-income investment. They pay a fixed rate of interest in exchange for the customer agreeing to not make any withdrawals in that account for a specific period of time, until a maturity date. Once the term of that CD is up, the investor receives their principal back. A problem with CDs is that if you have an emergency and need to access those funds, you could get hit with early withdrawal penalties. CDs are backed by the Federal Deposit Insurance Corporation (FDIC)—which means that the money you place in them is insured. There are limits to the amounts that are insured in each account, so it’s important to verify with your bank that the amount you are placing in that CD does not exceed the insurance limits.

Sometimes called money market deposit accounts or money market retirement savings accounts, these types of accounts also fall into the category of fixed-income investments and most are also backed by the FDIC. They generally offer a higher rate of interest than a traditional retirement savings account and offer account holders the flexibility of being able to make occasional penalty-free withdrawals. You only get six transactions (transfers or withdrawals) per month.

An annuity is a contract between you and an insurance company in which you make a lump-sum payment or a series of payments, and in return receive regular disbursements. These investments can guarantee monthly income for a retiree but they need to be funded many years in advance before you achieve any payout.

Know What Income Your Investments Will Provide You

As you can see, the common factor among the 11 ways you can invest for income is that you can know how much income your investments will provide you. You can also know when you will receive those interest or dividend payments. That’s why we like to say that by investing for income, you can know with more certainty what your financial future holds— certainty that most common stock investments can’t offer. If you are interested in learning more about how fixed income investing or other ways of investing, check out our Retirement Learning Library for more ebooks and webinars on investing.

As more and more Blue Cross Blue Shield employees are able to enjoy 20 or 30 years in retirement, it means it’s up to you to help ensure you’ve established reliable streams of income you can count on well into your final years in retirement. What if you are one of the lucky ones who make it to the age of 100? Instead of crossing your fingers and hoping for growth in an uncertain stock market, investing for income can help to reduce the chance that you’ll run out of money before you run out of life.

The first step is to make sure you’re working with a financial advisor who not only understands the complexities of planning and saving for retirement but also has the knowledge required to help you make the most of the fixed-income investment options available to you. By working with a financial advisor from The Retirement Group you can be sure you are working with a financial advisor who is also a fiduciary, and who understands the best ways to help you invest for income.

The Retirement Group is a nation-wide group of financial advisors who work together as a team.

We focus entirely on retirement planning and the design of retirement portfolios for transitioning corporate employees. Each representative of the group has been hand selected by The Retirement Group in select cities of the United States. Each advisor was selected based on their pension expertise, experience in financial planning, and portfolio construction knowledge.

TRG takes a teamwork approach in providing the best possible solutions for our clients’ concerns. The Team has a conservative investment philosophy and diversifies client portfolios with laddered bonds, CDs, mutual funds, ETFs, Annuities, Stocks and other investments to help achieve their goals. The team addresses Retirement, Pension, Tax, Asset Allocation, Estate, and Elder Care issues. This document utilizes various research tools and techniques. A variety of assumptions and judgmental elements are inevitably inherent in any attempt to estimate future results and, consequently, such results should be viewed as tentative estimations. Changes in the law, investment climate, interest rates, and personal circumstances will have profound effects on both the accuracy of our estimations and the suitability of our recommendations. The need for ongoing sensitivity to change and for constant re-examination and alteration of the plan is thus apparent.

Therefore, we encourage you to have your plan updated a few months before your potential retirement date as well as an annual review. It should be emphasized that neither The Retirement Group, LLC nor any of its employees can engage in the practice of law or accounting and that nothing in this document should be taken as an effort to do so. We look forward to working with tax and/or legal professionals you may select to discuss the relevant ramifications of our recommendations.

Throughout your retirement years we will continue to update you on issues affecting your retirement through our complimentary and proprietary newsletters, workshops and regular updates. You may always reach us at (800) 900-5867.

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