5 Ways Retirees on a Fixed Income Can Invest in the Stock Market
Written by
Laura Bogart
Edited by
Kristen Mae
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If you’re a retiree living on a fixed income and relying on Social Security, could you ever invest your money in the stock market?
That’s the question GOBankingRates reader Theresa recently submitted as part of our Top 100 Money Experts series. To help answer her, we turned to Austin Hankwitz, a leading financial educator and content creator known for his “Rate of Return” newsletter and his top-ranked Spotify podcast, “Rich Habits.”
Hankwitz enjoys helping people along their investing journeys, even if they don’t have a lot of money to start with. He has good news for Theresa: With discipline and realistic expectations, she can absolutely start investing successfully in the stock market.
Optimize What You’ve Already Invested
Hankwitz advised Theresa to make sure that any money she already has invested is working for her — or, as he put it, “invested correctly.” That means double-checking that she’s not overpaying or under-earning by staying in high-cost ETFs or poorly performing mutual funds, which can drag down her returns.
Even if she’s not contributing large amounts regularly, a well-structured, low-cost portfolio can still make a big difference in her success as an investor.
“Optimize what you have invested, first and foremost,” Hankwitz said.
Theresa would be wise to sit down with a financial advisor who can review her current portfolio and guide her through any changes she should make.
Understand Your Goals for Investing
Investing isn’t just about growing money for the sake of it. As Hankwitz reminded Theresa, it’s important to understand why she wants to invest — to eventually replace active income.
“The definition of retirement is simply having your portfolio income supplement your lifestyle,” he said. “Don’t go into investing blind. Understand exactly how big of a nest egg you’ll need to retire comfortably.”
He noted that if Theresa is living on a fixed or very low income, she’s probably not spending a lot each month — which means she doesn’t need to replace a large income. This realization, he hopes, will ease her anxiety.
“If you’re not spending all that much, you don’t need a massive nest egg,” he said. “It’s a lot easier to reach a retirement goal of $500,000 than it is $2 million. Know where you’re going.”
Cut Expenses Where You Can
To free up additional money that will make investing feel less of a strain on her budget, Hankwitz advised Theresa to look for ways to reduce spending, starting with recurring charges.
“When it comes to spending less, start by auditing your subscriptions,” Hankwitz said. “The average American has $194 in ‘unknown’ subscriptions on a monthly basis. That’s $2,328 a year being wasted on forgotten subscriptions.”
Cutting back on those could give Theresa a small yet meaningful buffer each month — money she can use to invest.
Give Yourself Breathing Room by Earning Extra
Just because someone has officially entered retirement doesn’t mean they can’t take on extra income through freelancing, consulting or part-time work. If Theresa is open to it, Hankwitz recommends working somewhere she enjoys — like a local coffee shop or bakery.
Beyond supplementing her income and supporting her investing journey, a part-time role might also provide welcome social interaction and daily structure.
Remember: Even Small Steps Count
While the stereotypical image of an investor is someone putting large sums into the market, Hankwitz wants people like Theresa to know that investing smaller amounts consistently still works. Even $25 or $50 a month creates momentum — and compounds over time. Consistency is key.
Bottom Line
Though it’s easy to understand why Theresa might be worried about investing on a fixed income, she should move forward with confidence. Hankwitz has some parting words of wisdom:
“Ensure what you already have is invested correctly, identify a realistic retirement goal, consider part-time employment and audit your subscriptions to kick-start finding unknown margin in your monthly budget,” he said.
This article is part of GOBankingRates’ Top 100 Money Experts series, where we spotlight expert answers to the biggest financial questions Americans are asking. Have a question of your own? Share it on our hub — and you’ll be entered for a chance to win $500.
This article is for informational purposes only and does not constitute financial advice. Investing involves risk, including the possible loss of principal. Always consider your individual circumstances and consult with a qualified financial advisor before making investment decisions.
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