If you have at least $100,000 invested in a CD as part of your financial portfolio, I can already tell you that money isn't doing enough for you. Chances are, you chose a CD because you were worried about loss and wanted a conservative, stable environment for you money.
But there's another stable and sustainable way to make that money work harder for you without jeopardizing your portfolio or your income.
The Goal: Get More Retirement Income
CDs have very low interest rates. They may be safe and secure, but they're not going to generate a large amount of income for you. For example, as of November 2013, a 1-year CD pays anywhere from .25% to 1.05% interest. Even if you invest $500,000, the top end of that scale is only going to generate about $5,250 per year...and that's before income tax.
The Solution: An Annuity
An annuity is a better way to finance your retirement. When you transfer your money from a CD to a single premium immediate annuity (SPIA), you get guaranteed payments for life beginning immediately. You choose how often to get paid—monthly, quarterly, semi-annually, or annually. Even better, that annual income is locked in for the rest of your life. You have the option to add inflation protection and long-term care benefits, too, making the annuity a very well-rounded choice for all your financial needs.
Let's say John, a 55-year-old man, has $500,000 in a CD that's up for renewal. His CD currently pays 1% interest. That gives him $5,000 in income per year before tax. He's looking for a way to get more money in his pocket on a monthly basis.
Now let's say John puts that $500,000 in a single premium immediate annuity. Every month for the rest of his life, he'll get a check for approximately $2,560.* He can't outlive it, which means if he lives to the age of 100, he'll get 45 years of payments at exactly the same rate.
Which sounds better to you: $5,000 per year or $2,560 per month?
If you're interested in maximizing your CD, call me or email me today!
*Quotes and rates are subject to change without notice. Please call me for the most current rates. Guarantees are subject to the claims-paying ability of the issuing insurance company. Actual rates may differ by age, gender, amount to invest, and current offerings of annuity providers.