Can You Retire Using CD’s – Certificates of Deposits?
The importance of saving for retirement is stressed throughout our lives. Most people value employment opportunities that offer 401k retirement accounts, particularly those who are lucky enough to have their contributions matched by their employers. In addition to 401k accounts, or for individuals who don’t have the option for 401k plans, the IRA is a very popular method of saving for retirement.
What many people don’t consider are the benefits of using Certificate of Deposits (CDs) as a way to save for retirement. Much like traditional savings accounts or your 401k – Certificate of Deposits offer a very low risk investment for people who save over a longer period of time. You can open a CD with almost any amount of money, and the longer you keep your money in the CD, the higher your interest rate will be. You select your savings term when opening the account from the available options – typically between 3 months and 5 years, but it depends on which financial institution you use.
A Certificate of Deposit is the same as loaning the banking institution your money for the term you choose to save for. In exchange for the “loan”, the bank gives CD holders interest. When your Certificate of Deposit reaches it’s maturity date, you then have the option to take out the money you’ve invested and the interest it earned, or to roll it into another CD or other investment. If using Certificate of Deposits as part of your retirement planning strategy, you should consider a ladder strategy of opening CDs of varying maturity dates, or simply reinvesting your money at the end of each CD term until you need it during your retirement years.
Certificate of Deposits are considered a good option for retirement since they are a safe investment. Individuals who are conservative with their money and do not wish to take a chance using higher-risk investments appreciate CDs for their predictable earnings. In particular, people who are approaching retirement age need to be more conservative with their money than someone who is in their 20′s. It makes sense to use Certificate of Deposits to hang on to the money they’ve already invested throughout the years.
For people who are already living out their retired years, Certificate of Deposits are a good way to help your savings earn more. Strategically investing your retirement money into multiple Certificate of Deposits that mature at varying time periods will give you access to a portion of your money each time one of the certificates matures – while the rest continues to earn interest.
Just remember that you can’t withdraw the money from a Certificate of Deposit until the specified maturity date without paying a penalty, so you won’t want to tie up all of your money in CDs. Take out what you need until your first Certificate matures and you’ll never need to pay the penalty to get your money out of the CD.
Certificate of Deposits offer strategic and safe savings for individuals saving for retirement, as well as people who have already reached the Golden Years. You can feel confident that the money you save in a Certificate of Deposit will still be there (plus interest) when it reaches it’s maturity date.
Garv breaks down Certificate of Deposits or CDs, learn why it might not be a good investment for your money.
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Question by thebrownbee: Does anyone know if a license is required to sell certificates of deposit in FL?
I work in a call center for an insurance company that sells financial products such as annuities and certificates of deposit. We are being asked to “pre-sell” the CD’s even though we aren’t licensed insurance agents. We’ve been instructed to calculate APY’s on large sums of money, provide the terms of the CD’s, etc. None of us have been offered any training nor do we have financial backgrounds. Is this legal?
Yes there is a licensed insurance agent in our place of business. My question is: Is it legal to require an unlicensed person to answer specific questions regarding investing in a CD? My understanding of my job is that when a caller rings up, I’m to get their name and number, and pass it along to the licensed agent who can answer their detailed questions. I know nothing about rolling an IRA over into a CD, if the person is paid monthly or at maturity, etc. The catch is: This company is offering promo rate CD’s as a bait to entice consumers. Once they have an interested party in their office, they switch and try to sell them an annuity or other product. The agent doesn’t get paid one dime to sell a CD; his commission comes off the annuities.
And yes, I have been looking for another job for quite some time now.
Best answer:
Answer by jaysweep
You are the lead or contact person. Someone in your office has the authority to sell these financial products.
Know better? Leave your own answer in the comments!
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Category: Certificates Of Deposit
