By Robert Berger
Though it looks like the market is beginning to turn around somewhat, we’re still living in an incredibly low-yield environment. When you’re buying your first home, this is great. When you’re trying to make your retirement savings last, it’s challenging.
Many of today’s retirees are having trouble maintaining their savings in this low-yield environment. Times like these call for creativity and extra planning, as traditional retirement investments simply aren’t cutting it. If you need to increase your yield to further stretch your retirement funds, here are six options for doing it:
1. Online banks and credit unions. While you’re not going to make a lot of money on any savings account these days, increasing your savings yield by moving your liquid savings can be helpful. Credit unions and online banks both tend to offer better savings and checking account yields than traditional larger banks. Taking advantage of special savings and checking account offers can really increase your liquid savings yield. Watch for offers from credit unions and high-yield, low-fee online savings accounts.
2. I bonds. I bonds can be an excellent low-risk investment that protects your money from inflation. They earn interest based on a fixed rate combined with a variable rate indexed for inflation.
Even though I bonds get very little by way of interest – 1.18 percent between May and October, 2013 – the fact that they’re indexed for inflation keeps you from losing money every year. Sure, other investments may earn more like 2 or 3 percent, but without that extra inflation rate, you’ll actually lose money over time. There are some restrictions in terms of getting access to your money in the first year, and you’ll pay a small penalty if you withdraw your money in the first five years, so be sure you understand how I bonds work before making the investment.
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