Key Advantages of CDs for Retirees
Wednesday, 22 May 2024, 20:00
Benefits of Certificates of Deposit (CDs) for Seniors
Certificates of deposit, or CD, accounts are more than just long-term deposit vehicles. They offer many qualities that are especially beneficial for senior citizens.
Predictable Income
- CD owners can withdraw interest without penalty while leaving the principal balance untouched.
- CDs function as a fixed-income investment with steady income, ideal for when interest rates are high.
Financial Flexibility
- CDs come in various terms, allowing retirees to access funds when needed.
- Creating a CD ladder provides a mix of income and liquidity.
- While early withdrawals incur penalties, the principal is protected by FDIC insurance.
Principal Protection
- FDIC-insured CDs safeguard the principal up to $250,000 per account holder, per institution.
- Even in early closures, the penalty usually affects only interest earnings, not the principal.
In contrast to other fixed-income investments, like Treasury bonds, CDs maintain the original principal value, making them a secure option for senior investors.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.