Here's where retirees should keep $20,000 right now (and where they shouldn't)
Summary
Retirees should carefully choose where to keep $20,000 to earn good interest while keeping access to their money. High-yield savings accounts and money market accounts offer better interest rates and flexibility compared to traditional savings accounts or certificates of deposit (CDs).Key Facts
- Stock market returns over the last 10 years have been about 16%, but stocks can lose value quickly, which is risky for retirees.
- Inflation and higher interest rates make careful saving important for retirees.
- High-yield savings accounts currently offer about 4% interest and allow easy access to funds.
- Money market accounts offer interest rates in the high 3% range and allow check writing.
- Both high-yield savings and money market accounts are insured by the FDIC, protecting deposits.
- Traditional savings accounts have very low interest rates, around 0.38%, which do not keep up with inflation.
- CDs may offer fixed rates but restrict access to funds and might not be suitable for those needing flexibility.
- Retirees should consider accounts that balance good returns with easy access to funds in case of emergencies.
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