I just transferred my IRA (~45,000) to a bank giving interest increases yearly. First year 2%, then 2-1/2, 3 and 3-1/2 on the 4th year. Penalty is 6 month's interest if closed. I can take money out on the anniversary date each year.

I'm 76 and know this is a long commitment. I'm widowed and have SS of $1,793 monthly and rental income of about $4,500 annually. House is paid and no credit card debit. I don't receive enough to completely pay real estate taxes and house insurance which I cover with my cash savings of about $40,000. House is worth $600-700,000. It's in trust for my children.

I'd appreciate any comments or suggestions. I printed your Financial Organizer - thank you!

Diana Ehorn

Terry Says:

Well, there’s nothing you can do about the IRA now — unless there is a “grace period” which allows you to withdraw.   But the rates on this deal are pretty low — and are likely to look more puny in the months ahead.

If you can withdraw without penalty,and since it is in an IRA (which requires a custodian),  I would switch it into a bank that offers a higher deposit rate, and stagger the maturities, buying a 6-month and a one-year, and a two-year CD.  As each matures, you can renew at whatever the current market rate is — likely higher.   Rates are rising and will probably rise faster than this “deal” your bank offered to lock you in!  If it’s a Chicago bank, show them this post and tell them they can — and should — offer higher rates!