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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.
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
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've got a bunch of CDs that I bought in the past 6 weeks that are between 4.5 and 4.8 percent per year for 18 months or 2 years. I buy them through my Charles Schwab brokerage account as new issue and there is no commission or fee to buy. Sure, it is less than inflation but I'll gladly take close to 5 percent for a guaranteed interest rate and no loss on the original amount as long as I hold it for the full term.
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?
One thing the talking heads miss is the ability for seniors to cut costs. With Covid got used to not traveling so much. So the tank of gas may last 2 weeks instead of one. Just not driving as much. So transportation & housing could be a lot less than they were working.
As for grocery you may also have ability to but store brand vrs names & other ways to cut costs or make substitutes.
Maybe cut that $60,000 to $5000/month. May depend in a "bad" year for health expense to hit that level if not covered by Medicare & your Medigap + prescription drug coverage. In a "good" year only have the premiums to pay. May be once in a decade to have that "bad" year. May be once in 20 years for "terrible" year.
In sum each family's situation would be different depending on the cost of living, taxes, in your state.
May also depend on a lifetime of saving habit. If you were saving $1000/month for retirement maybe save same amount now for other goals. Then as senior find perks & discounts to take advantage of.
COL varies widely so you can’t generalize as to what yearly income is enough. Plus people’s tastes vary greatly and some people can’t imagine having fun unless they are spending large sums of money.
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?
60k would be a miserable life in nyc . We run 2 to 3x that
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
Never guess what others need
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
Last edited by mathjak107; 12-04-2022 at 11:36 AM..
I've got a bunch of CDs that I bought in the past 6 weeks that are between 4.5 and 4.8 percent per year for 18 months or 2 years. I buy them through my Charles Schwab brokerage account as new issue and there is no commission or fee to buy. Sure, it is less than inflation but I'll gladly take close to 5 percent for a guaranteed interest rate and no loss on the original amount as long as I hold it for the full term.
I'd love to get the brokered CD's because of the higher interest rate but the fact the broker cannot hand me a certificate at the time he draws the money out of the brokerage account (the CD has to "settle" for several days before any proof of purchase is issued by the bank offering the CD) goes against all my rules for absolute proof of CD issue to me, because I buy the CD's for$250K at a time and I don't want a broker having access to that money--too much theft going around in brokerages. You're fortunate you have a broker you can trust.
60k would be a miserable life in nyc . We run 2 to 3x that
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
Never guess what others need
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
We live in a suburb of Los Angeles which is fairly high scale but we order all our things off Amazon including food so it can be delivered to us--we haven't stepped into a Whole Foods for 9 months. Our groceries run about $1k/mo for 2. Add another $1k. mo. for miscellaneous and then another $1k/mo for utilities and we are barely at $36k and still lots of wiggle room. No rent--we own. But if a person is in NYC or thereabouts and renting then you're right--$60K annually just won't cut it when the LL is raising his rents by $1k ever six months.
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