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It was a long time coming. The last time I saw CD rates at 5% was in 2006. After 2008 they went down to practically 0 until now. The Fed is slowly raising them. Right now nearly all the major banks have them at 3-4%. Projections are that at the next Fed meetings in Dec, Feb and March they will raise them another 1.5%. That means a senior with a million dollars in savings could be reaping $40-50,000 in interest by the end of the first quarter in 2023. That amount of interest along with SS could mean a senior would not have to draw down their savings in order to get the bills paid if their needs fall within those perimeters. They could free themselves from the uncertainty of the stock market. My principle had been steadily eroding from 2008 onward. Now that has been halted and I can actually see it start to rise again. The banks advertising 4% are easy to find. Just google "Best CD rates" and plenty will pop up. Good luck.
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Originally Posted by mathjak107
They are already coming down as bond rates fall …
4-5% rates in 8% inflation is setting us behind zero rates and 1-2% inflation
Quote:
Originally Posted by thrillobyte
On paper you're correct, jak. But many seniors don't have house payments so cost of habitation is not a concern. My wife and I eat well and don't go without, even though our organic food choices cost-wise are higher than they were pre-pandemic. We live comfortably on my interest payments--FINALLY--along with my SS. The income totals around $60K annually and gets all our expenses paid. We don't feel this 2% gap and of course each family's situation is different, but I think $50K plus SS would be enough for most seniors to live comfortably on. Or am I wrong? Are seniors still having difficulties getting the bills paid on $60,000?
I can see where both of you are coming from.
The last couple of years have been tough for those invested in equities and bonds. Interest rates on savings accounts and CDs have been near zero, to boot. Rates on savings and CDs have been creeping up recently, and to a retiree with significant liquid assets, 4-5% could produce a decent income (dollar-wise), without risking principal. Being invested in a down market with 8% inflation could put you in an even worse situation.
Considering that many pundits are predicting we haven't seen the market bottom yet, and further Fed rate hikes are anticipated, I can see why a retiree might seek to preserve their assets, rather than risk further erosion of principal, given that most are no longer in a position to contribute additional funds, at this point in their life.
I remind you that the OP mentions $60k in expenses with no housing expenses (paid off house).
I just wanted to set the record straight: I'm pretty sure I said "$60K in income consisting of interest on CD's plus SS." The expenses for me were far less.
The last couple of years have been tough for those invested in equities and bonds. Interest rates on savings accounts and CDs have been near zero, to boot. Rates on savings and CDs have been creeping up recently, and to a retiree with significant liquid assets, 4-5% could produce a decent income (dollar-wise), without risking principal. Being invested in a down market with 8% inflation could put you in an even worse situation.
Considering that many pundits are predicting we haven't seen the market bottom yet, and further Fed rate hikes are anticipated, I can see why a retiree might seek to preserve their assets, rather than risk further erosion of principal, given that most are no longer in a position to contribute additional funds, at this point in their life.
Seniors with conservative managed portfolios are probably only getting around 6-7% yearly with risk, not worth it with CD rates on the rise.
Such a proposal in the OP contemplates being on Medicare so medical costs are kept at a minimum (Advantage) My BS Advantage had a total annual max out of pocket of $900 plus coverage of most all the meds that weren't extraordinary. And best when you're in a low cost property tax state. Fortunately the interest rates are not determined by state so a person living in for example Michigan, the most low-cost state in the nation for retirees can still get a 4% rate on their CD's. One note of caution: I took several penalties on early withdrawals to get my CD's out of 1-1.5% and into 3.5-4%. One bank, US has a penalty of 1% so at $250K I took a $2500 hit but I always made it up and then some.
Your Medicare Advantage has annual max out of pocket $900 is pretty good.
But as far as savings,you do not have to go with a local bank,CFG has the highest money market rate ,you can withdraw with no penalty.
When you do a search onlne on highest rate,it does not show CFG bank,but it is often the highest.
4.65 % 12 months Cd,4% money market
Yes, I am aware that my account is insured by the SIPC. This is a private organization run by the consortium of brokerages though, it's not exactly like the FDIC even though their actions are similar. Call me paranoid and I am but what i fear is that with an amount like $250K they may decide, "Well, Mr. Thrillobyte, we feel that the reason your money disappeared was not due to any theft on the part of an agent or institution but to your recklessness in handling your online activities. You most likely gave your log-in info to someone you trusted and they absconded with your funds. Therefore we are not obligated to replace the funds. Thank you."
Ironically, that has happened at your so-called super-safe banks, but you don't seem to be concerned about that. Instead, not only are you worried (paranoid) about a brokerage stealing your money, but you're even worried that should that unfathomable situation occur, you are then worried that SIPC insurance wouldn't cover your loss.
Did you even read those cases in your link? They concern individual shady characters and other fly-by-night small brokers who hoodwink their clients. There is nothing in there coming even remotely close to what you're worried about: depositing your funds with a major brokerage house such as Charles Schwab, JP Morgan Chase, Fidelity, etc., and then having your funds stolen from you before you have the chance to purchase a CD.
My son is in westchester and his real estate taxes are 31k a year.
I also live in New York State, but in small town USA. My school, village, and town property tax totals $4800 a year, Star reduction on school tax about $420, so we have a wide range going on in the state.
60k qualifies you for a low income housing project …
Just rent, Medicare and supplement and long term care insurance would eat most of that up for us . We are not in manhattan either , where rent alone is 60k a year and apartments that are coop or condo are a million or more to buy
Taxes in the tristate area can eat up 12-20k on a paid off home .. more desirable areas can run way more …nyc has an income tax so taxes are lower on real estate …Long Island , westchester , New Jersey can be much more in real estate taxes since most dont have a local income tax just state and federal
New Jersey , New York and Connecticut would be tough to live on 60k as a couple unless you were in a less then diserable area or lived a very low end life
Would a reverse mortgage work in these scenarios?
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