Put your CDs return to work during retirement

Put your CDs return to work during retirement

CDs are a practical solution to supplement cash flow, as they offer a steady source of income and, at the same time, they have the ability to grow.

Retirement is a great time to put your CDs return to work, as it can fill the gap in your monthly income stream or help you save for other mid- or long-term goals.

CD ladder

This is a great strategy for generating cash flow. How does it work? Pretty simple: open a series of CDs that mature at different times. When the first one matures, use the interest income and reinvest the original amount in another CD at the top of your ladder. This way, you will create a consistent and ongoing income that will last throughout your retirement years.

This is a great way of funding mid- and long-term goals. Open different CDs for different financial goals, like buying a new car, going on vacation or helping your grandchildren with their college tuition. You can match your CD maturity with your goal. Discover offers CDs that have a maturity age that range between 3 months and 10 years.

This is a great alternative to bonds, which are usually preferred by investors who seek a safe haven for their investment dollars. CDs offer safety and, sometimes, they also offer more attractive yields.

A solution to excess 401(k) or IRA distributions

IRS requires individuals to start taking distributions from their retirement accounts when they reach the age of 70 and a half in order to comply with the required distribution rules. 

Those distributions are currently more than you will need to spend, so a CD ladder is a great option to contribute that excess until you need to use that money.

Use this strategy to put your money to work for you. Different maturity dates will have different interest rates, so you will harvest interest at the same time you reinvest the original amount, generating an interesting cash flow for your retirement years.

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