Consider These 5 Alternative Savings Methods for Retirement

If you’ve been following the stock market lately, you might have noticed it’s looking a little volatile. Economic uncertainty due to tariffs has made the stock market resemble a roller coaster with daily ups and downs. It’s leaving many Americans feeling nervous and uncertain about their retirement savings. However, there are alternative savings methods for retirement to consider. 

That’s right — there are ways to safeguard your savings against market volatility. While tax-advantaged retirement savings accounts, like 401(k)s and IRAs, remain the best way to save for retirement, they’re not the only methods. If you’re worried about your retirement savings being tied up in the stock market, consider these alternative savings methods.

5 Alternative Savings Methods for Retirement 

1. Annuities

An annuity is a type of financial product that can provide a steady income in retirement without requiring investments in the stock market. When you take out an annuity contract with an insurance company, you agree to make regular payments for a specified period, known as the accumulation phase. Then, when you retire, you enter the annuitization phase, where you receive payments from the insurer.

Annuities are often recommended as supplemental retirement savings alongside an employer-sponsored 401(k) or an IRA. They grow on a tax-deferred basis and provide a lifelong guaranteed income stream that’s not reliant on the stock market. However, they often come with fees and penalties, so be sure to review the fine print carefully before proceeding.

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2. Cash Savings

It’s always wise to have cash savings on hand, and that remains true when you retire. Get the most out of your savings by choosing a high-yield savings account (HYSA), which typically has a higher APY than a traditional savings account. HYSAs often have low balance requirements and no fees, so you can focus on growing your money.

Other cash savings options include certificates of deposit (CDs) and money market accounts (MMAs), which both typically offer higher rates than regular savings accounts. 

With a CD, you invest a lump sum of cash for a set period at a guaranteed fixed rate. Once the term has ended, you can roll the money into another CD or withdraw the funds. 

MMAs usually come with debit cards, allowing you to use the money more easily when needed, although the number of withdrawals is limited per month. Like HYSAs, MMAs tend to have higher rates than traditional savings accounts.

3. Health Savings Account

You might already know that health savings accounts (HSAs) help you pay for out-of-pocket medical expenses, particularly if you have a high-deductible health plan. What you may not know is that your HSA can also help you save for retirement.

The money you contribute to an HSA is pre-tax, which gives you a tax break by lowering your taxable income now. The funds grow tax-free, and you can withdraw funds for qualified medical expenses without paying taxes. 

You can withdraw money for non-medical expenses in an emergency, however, you’ll pay a penalty for doing so. But once you turn 65, you can withdraw HSA funds for non-medical expenses penalty-free; you’ll just pay tax on withdrawals for these non-qualified expenses.

You can also invest your HSA money if you decide, though financial experts recommend using a more conservative investing strategy than you would for your regular retirement accounts.

4. Real Estate

Investing in real estate can provide you with a steady income stream in retirement. Buying a property and renting it out is a common way to invest in real estate, but most people lack the capital to purchase rental homes in desirable areas. Fortunately, there are alternative ways to access the rental property market.

Real estate investment groups (REIGs) collect a pool of money from a group of investors and purchase rental properties. Each investor owns one or more rental units, but the day-to-day property management is handled by the company that operates the investment. You’ll still need a considerable sum of money to invest in a REIG, but it can be less stressful because you won’t have to deal with tenants directly.

Online real estate platforms, also known as real estate crowdfunding, accept smaller contributions from investors and pool them to invest in various real estate opportunities. Investors then become shareholders in the property, which lets them profit without purchasing an entire property.

5. Whole Life Insurance

There are two types of life insurance policies: term and whole life. Term life insurance policies are more affordable and provide a death benefit in exchange for monthly premiums paid over a specific period, known as the term. However, if you don’t die during the policy term, your premiums are gone forever.

Whole life insurance, also known as permanent life insurance, is more expensive than term life insurance. However, it also includes a cash value component that you can use to supplement your retirement income. When you take out a whole life insurance policy, your initial premium is what you’ll pay for the life of the policy (which is why taking out a whole life policy when you’re young and healthy is ideal). 

Over the policy’s life, your cash assets will grow at a guaranteed rate. You can borrow from the policy without paying taxes or penalties — ideal in retirement if the market has a down year and you don’t want to withdraw from your 401(k) or IRA. However, any money you borrow will be subtracted from your death benefit, and your beneficiaries will receive a smaller payout when you die.

Alternative Savings Methods for Retirement Can Boost Your Savings

A volatile stock market can leave you anxious about your retirement savings. The best recourse is diversification. With the right mix of traditional retirement accounts, like 401(k)s and IRAs, and alternative retirement methods, like annuities, HSAs and whole life insurance policies, you can better protect yourself from market fluctuations so you can feel more confident about your future.

Catherine Hiles is a Certified Financial Education Instructor and freelance writer specializing in personal finance and home improvement. She lives in Ohio with her husband, two children and two energetic dogs.