If you have at least $100,000 invested in a CD as part of your financial portfolio, I can already tell you that money isn't doing enough for you. Chances are, you chose a CD because you were worried about loss and wanted a conservative, stable environment for you money.
But there's another stable and sustainable way to make that money work harder for you without jeopardizing your portfolio or your income.
➡️ Want to talk to a real person about maximizing your financial assets? Call or email me for a personalized consultation!
The Goal: Get More Retirement Income
CDs have very low interest rates, especially if you're working with a name-brand nationwide bank. They may be safe and secure, but they're not going to generate a large amount of income for you. For example, as of October 2023, a 1-year CD from Bank of America pays .03%. Chase pays less, at .01%.* Even if you invest $500,000, the top end of that scale is only going to generate about $15,000 per year...and that's before income tax. Of course, higher rates are out there...but are often offered by online-only banks. A lot of my clients would rather work with a bank they can access in person, which means they're stuck with much lower rates.
The Solution: An Annuity
An annuity is a better way to finance your retirement. When you transfer your money from a CD to a single premium immediate annuity (SPIA), you get guaranteed payments for life beginning immediately. You choose how often to get paid—monthly, quarterly, semi-annually, or annually. Even better, that annual income is locked in for the rest of your life. You have the option to add inflation protection and long-term care benefits, too, making the annuity a very well-rounded choice for all your financial needs.
➡️ Want to talk to a real person about maximizing your financial assets? Call or email me for a personalized consultation!
Case Study
Let's say John, a 55-year-old man, has $500,000 in a CD that's up for renewal. His CD currently pays 1% interest. That gives him $5,000 in income per year before tax. He's looking for a way to get more money in his pocket on a monthly basis.
Now let's say John puts that $500,000 in a single premium immediate annuity. Every month for the rest of his life, he'll get a check for approximately $2,560.* He can't outlive it, which means if he lives to the age of 100, he'll get 45 years of payments at exactly the same rate.
Which sounds better to you: $5,000 per year or $2,560 per month?
➡️ Want to talk to a real person about maximizing your financial assets? Call or email me for a personalized consultation!
*Quotes and rates are subject to change without notice. Please call me for the most current rates. Guarantees are subject to the claims-paying ability of the issuing insurance company. Actual rates may differ by age, gender, amount to invest, and current offerings of annuity providers. Sample CD rates mentioned above posted by Bankrate.com in "Best 1-year CD rates - October 2023."