3 Best Places to Put Savings in Retirement

3 Best Places to Put Savings in Retirement

In retirement, it’s common to have extra savings in CDs or the stock market. However, CD rates are abysmally low, and the stock market can cause stress and panic, particularly during the pandemic.

So, where are the best places to put savings in retirement? We’ve put together our three best recommendations, ideal for those aged 65+.

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1. Fixed Annuity

Fixed annuities, in many ways, are the perfect compromise between the safety of a CD and the returns of the stock market.

Fixed annuities allow you to preserve and grow your extra savings with no risk of losing your principal. The most popular contract length for those in retirement is five years, but you can go as short as one year.  

  • No fees
  • No risk of losing your principal
  • Guaranteed interest rate
  • Contract length options
  • Free withdrawals
  • Access to your earned interest
  • Avoids probate

Fixed annuity interest rates in 2021 are between 2-3%, a much higher offer than the average CD rate of 0.3% (FDIC, cited the week of February 22, 2021).

You can start up a fixed annuity with as little as $10,000. For reference, most of our clients start up an annuity with $40,000-$50,000.

It’s also common to rollover retirement accounts, like your 401(k) or IRA, into a fixed annuity.  

If you started a fixed annuity with $50,000 today, you could earn up to $1,475 in interest by the end of your first year. An average CD, on the other hand, would only make you $150.

In sum, our top recommendation for a place to put extra savings is a fixed annuity.

2) Whole Life Insurance

If you have extra savings you want to pass on to your children or spouse after you pass, a whole life insurance policy is a perfect fit.

A whole life policy is a permanent policy. Unlike term insurance, which expires after a certain number of years, a whole life policy lasts for as long as you live.

If you have extra savings you don’t need access to, we recommend looking at High Cash Value Single Premium Whole Life Insurance.

It’s a mouthful, but it means you buy the entire life insurance policy up front with a lump sum. As soon as you make your deposit, the death benefit and the cash value will start to grow.

  • One premium
  • Guaranteed death benefit for as long as you live
  • Grows in value over time
  • Tax-free death benefit

Related: A Beginner's Guide to Life Insurance Needs In Retirement

Case Study: Lynette Had $100,000 at the Bank

Here’s a real-life case study from a client in our local office.

Lynette was 81 years old with over $100,000 in her checking account. She knew those savings weren’t earning interest in that account, but she didn't know what else to do with the money. She asked Luke Hockaday for advice.

Luke asked her what she hoped to do with the money, and she indicated that she would like to pass this on to her children. So, Luke quoted her a high cash value single premium whole life policy.  

Buying this policy with $100,000 would give Lynette a guaranteed death benefit of $126,000.

In this case, the original deposit continues to grow, along with the death benefit. If Lynette does need the money, she can draw from the cash side. If she does not need to access the money, it will pass on to her children, tax-free.

In sum: you should choose a high cash value single premium whole life policy if your priority is a guaranteed death benefit for your loved ones, and you have a large sum of money just sitting around. The added perk is that you can still draw out some of the money if you need it.

3) Fixed Index Annuity

Earlier in this article, we talked about fixed annuities. A fixed annuity is as simple as an annuity gets – your money earns a guaranteed interest rate for the length of your contract.

A fixed index annuity is a little more complex. Your principal is still protected – you can’t lose any money – but you get to participate in the ups and downs of the stock market.

Your gains are capped, but you can’t ever go below 0%.

As an example, let’s say the stock market goes up 9%. Your cap may be at 6%. You still experience the gain, but it’s limited.

Now, let’s say the stock market goes down 10%. You don’t experience that loss at all. You go down 0% – you lose nothing.

Retirees enjoy this strategy because they have the opportunity to earn higher interest rates without the risk of actually having money in the stock market.

  • Potential to earn a higher interest rate
  • You could earn 0% in a worst-case scenario
  • Tax-free death benefit
  • Free withdrawals
  • Access to your earned interest
  • Contract lengths tend to be a bit longer (around seven years)

If you like the idea of participating in stock market gains while avoiding losses, a fixed index annuity is a great option. You can still withdraw money from the annuity, and you can pass the money on to your beneficiaries while avoiding probate.

Ask us about an illustration. An illustration includes 10-year charts that show you what you would’ve earned in three scenarios:

  1. The best 10-year stretch
  1. The worst 10-year stretch
  1. The last 10 years

Request a fixed index annuity illustration today.

Avoid Savings Accounts

If you have excess money you don’t need for emergencies or planned expenses, a savings account isn’t a great way to earn interest.

Some of the nation’s biggest banks offer an interest rate of only 0.01% on your saved up cash. To put that into perspective, that means you earn $10 per year if you have $100,000 in savings.

If you’re over age 65 or are retired, consider moving extra savings from the bank and put it into an annuity or life insurance policy that will grow your hard-earned cash.

Avoid CDs and Money Markets

A CD, or Certificate of Deposit, is a safe way to invest your money with your bank. However, the rate of return is meager, particularly in these pandemic times.

A CD might make sense for you in rare circumstances, but a fixed annuity will offer a higher interest rate.

A Money Market Account, or MMA, is another way to earn interest on your money. They generally require a higher minimum balance, but the interest rates tend to be better than savings accounts (though not always).

The way these accounts work is that the bank uses your money to make other investments or loans. As a way of thanking you for that money, they give you a bit of interest. Money market rates are comparable to savings account rates.

If you have extra savings you don’t need access to in the near future, a CD or Money Market Account is not an option we would recommend.

Related: Mike Is Getting Double the Interest Thanks to Luke Hockaday


Not sure what to do with extra savings you have in the bank (or under the mattress)? Let us help you compare your options to jumpstart your retirement.

A fixed annuity, whole life insurance policy, or fixed index annuity may be an ideal option for you. Our local, licensed agents will get to know you and your preferences so that you can make an informed decision about your money.

Ready to plan for retirement? Click here to get started.

This article was originally published in 2018. It has been reimagined and revised as of March 2, 2021. Our tried-and-true advice is the same, but we've updated the current interest rates and have clarified some of the concepts.

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Disclaimer: We do not offer every plan available in your area. Currently we represent 4 organizations which offer 41 products in your area. Please contact, 1‑800‑MEDICARE, or your local State Health Insurance Program to get information on all of your options. Not connected with or endorsed by the United States government or the federal Medicare program.