We are retirement age and have $30,000.00 savings. Would it be better to put the money in CD or money market account?

We are retirement age and have $30,000.00 savings. Would it be better to put the money in CD or money market account? Asked by captain604 29 months ago Similar questions: retirement age $30 000 00 savings put money CD market account Business > Financial Planning.

Similar questions: retirement age $30 000 00 savings put money CD market account.

It depends on how liquid you need the money to be. If you put the money in a CD, you can usually pick from a 3 month, 6 month, 12 months, 13, months, etc. It depends on the bank. Each bank offers different time frames.

The problem with a CD and most banks is there is an interest penalty if you take the money out early. So if you put the entire $30,000 in a CD, and then need some of the money before the CD matures, you will be hit with a penalty for early withdrawal. There is a new online bank that has been advertising recently called Ally bank that has no monthly fees, surrender charges, and no minimum balances.

They are built on the foundation of GMAC. They claim they are one of the best capitalized banks with three times what the FDIC claims as well capitalized. You might want to take a look.

Here is a review of the bank. moneyning.com/review/ally-bank-review/ With a money market account, the money is liquid and you can take as much or as little as you need with no penalty for early withdrawal. Usually CD rates are higher than money market rates.

But, in today’s financial environment, the difference is not going to be that great. Some banks offer almost the same on rates for both, and some banks offer about 50 basis points more for the CD.(one half percent). Here is a site with some rate comparisons.

money-rates.com/mmarket.htm.There are a number of different strategies you can use when buying a CD. Laddering. Longer term CD’s usually earn the highest interest rates.

But, with the volatility of interest rates now, you do not want to lock in, say a 3 year CD, because if rates go up, yours will not adjust until the CD matures. So you can use laddering, but be careful as there are some built in tax traps. Let’s look at a 3 year strategy.

You invest your $30,000 in equal amounts into a 3 year CD, a 2 year CD and a one year CD. After the first year, one CD will mature and the others will have one less year on their term. You take the matured one year CD, now with larger interest, and roll it into a new 3 year CD.

This way a CD will mature each year and be reinvested into the longer term, higher interest CD. This way you are getting a higher rate without locking all your money in a long term CD. But, watch out for the larger compound interest.

With compound interest comes compound tax. And since interest is treated as income for Social Security purposes, you need to be careful that your Social Security, interest, dividends, short term capital gains, tax exempt interest, and any earned income you may have does not push your income into an area where your Social Security benefit is subject to tax. For a married couple, total earnings over $32,000, including Social Security,will cause you to report 50% of your benefit as income and pay tax on it.

Over $44,000 and 85% is subject to tax. This may not be a problem for you now, but if interest rates start to go up and you keep laddering the CD’s this may become an issue. Bullets.

You would only use this if you have a specific goal in mind. You stagger the purchase of the CD’s, all of which mature at the same time. By purchasing CD’s at different times, you reduce the risk of missing out on a higher interest rate.Barbell.

Buy some longer term CD’s and some short term CD’s. This gives you some liquidity and allows you to take advantage of interest rate changes. Stay away from annuities unless you are in your mid to late 70's.

These work well if you think you will need a way to receive money each month as you get older, and might not have the faculties to handle the administration or have no one to do it for you. Annuities have a number of internal expense charges that can eat away at your earnings. Most annuities have guarantees.

These are provided in the form of an internal insurance policy that pays the insurance company back at the time of your death. This is usually listed as M&E charges (mortality and expense). These charges are usually average 115 basis points (1.15%).

This means if your annuity earns 1.15% and the expense charges are 1.15%, the two will offset each other and your return would be 0%. Second, annuities have surrender charges that last from 1 to 12 years. They usually start, for example at 7% and decline to 0% by the end of surrender period.

It might look something like 7%,7,7,7,7,7,6,5,4,3,2,1. Each company has a different set of surrender charges depending on the contract. Then comes management fees that can be as low as 18 basis points, (.18%) to 82 basis points, (.82).

This the fee the fund company charges for investment sub accounts. These do not usually exist for fixed annuities. Since I don't know your financial situation, it is very difficult to make any specific recommendations.

But, you may want to visit your local bank and talk with a financial specialist about your own situation.

That depends on your need for liquidity CDs lock your money up for 6 months to 5 years at a time. You can get your money, but you have to pay a penalty in most cases. Money market accounts do not pay as much interest as CDs, but you can pull your money out any time.

Without any more data about you than "retirement age", it is tough to make a recommendation. Do you have access to other funds via a home equity line of credit? Do you have large credit card debt?

Do you need to support grandchildren? I would recommend splitting the difference and putting half in CDs and half in money markets. You could put it all in money markets initially, and slowly ladder your CD, so some CDs are maturing every year in case you need the money.

You can also use different length CDs. I hope this helps.

Cd yukan get bout 3% in cd, munee funds now pae 0.5% .

1 It would be better to talk to a financial consultant - someone who actually knows what the heck they're talking about, rather than ask a website full of unqualified strangers for their unqualified opinions.

It would be better to talk to a financial consultant - someone who actually knows what the heck they're talking about, rather than ask a website full of unqualified strangers for their unqualified opinions.

2 I recommend you buy a good mattress and stuff the money in there.

I recommend you buy a good mattress and stuff the money in there.

Can I take a tax deduction for the fee I pay to my financial advisor who manage my retirement account/investment.

I plan to retire at age 62, can I keep half of my pension benefits in a savings account and roll over the other half.

I cant really gove you an answer,but what I can give you is a way to a solution, that is you have to find the anglde that you relate to or peaks your interest. A good paper is one that people get drawn into because it reaches them ln some way.As for me WW11 to me, I think of the holocaust and the effect it had on the survivors, their families and those who stood by and did nothing until it was too late.