Where to place safe money for max return in retirement acct ?
We are both retired and have a comfortable income from pensions and my wifes SS, at present I'm not collecting my SS. We have a sizeable investment with a financial advisor which at this time we do not take any withdrawls from, I'm calling it legacy money at this point. In my wife's portion which she rolled over from a 403 she is more conservative than I am and so she has about 25K sitting in a certificate earning only .5%. This cert is coming due, and with rates rising I'm wondering if it would be better placed in something following Treasuries. Any thoughts ?
Terry Says
A couple of things come to mind as I read your post. First, a reminder that in the year after (or better yet the year during which) you reach age 70-1/2, you must start withdrawing a required minimum amount from your retirement accounts. Since you're not yet collecting Social Security, I'm assuming you are under that age, but it is something worth planning on. That money will come out as taxable income -- and if the withdrawal is large enough, it might even impact the amount you pay for Medicare Part B! You don't have to spend your withdrawals; you can just put them in the bank! And make sure that you have titled your "legacy" account correctly -- with your spouse as beneficiary if it is in IRA rollover, or if it is after-tax money, title it in the name of your Revocable Living Trust to make things easier if one of you is incapacitated. I think the real thrust of your question, though, is about what to do with that cash. I call it "chicken money" -- and I know people sleep better at night knowing it is there for emergencies. CD rates typically follow Treasury Bill rates, and for this small amount a CD or bank money market deposit account is equally suitable. There's not much difference in the interest you will earn -- and you want the money accessible. Since this CD is in your wife's IRA, check with your bank custodian. Many allow you to "break" an IRA CD early without penalty. Get it in writing, because if that's the case, she could lock the cash up for a slightly longer term and not worry about rising rates.