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Key Takeaways
- More than 4.1 million Americans are expected to retire this year, according to one report.
- If you don’t have a retirement account that can help you sustain your living expenses, consider opening a CD with a high interest rate before rates drop later this year.
- CDs provide a safe and predictable way for you to grow your nest egg, especially if you opt to do a CD ladder.
- Just don’t forget to name a beneficiary for your CDs—this protects your money and guarantees that it will be distributed according to your wishes.
Retirement means no more alarm clocks, but it could also mean losing the ability to contribute regularly to retirement accounts like 401(k)s and IRAs. According to The Alliance For Lifetime Income, more than 4.1 million Americans will turn 65 in 2025, which means over 11,000 U.S. adults may choose to retire daily.
If you’re one of the many retirees in 2025 who don’t have retirement accounts and plan to rely on savings and Social Security income, it’s important to consider your options. You don’t want to run the risk of outliving your savings and you can only contribute to a Roth IRA after retirement if you have earned income and meet eligibility requirements. So, if you plan to travel or spend time with family instead of work, you’ll need to seek other options.
Right now, the best high-yield savings accounts pay up to 4.75% and the top-paying CDs pay up to 5.50% APY, which can help you earn more interest on your money over the next few years before rates drop.
Open a CD While Rates Are High
Opening a CD now while rates are high is a good idea since you may be able to secure a higher APY than you can get a few months or years from now. Plus, if the Federal Reserve decides to lower rates during the term of your CD, your returns won’t be affected since most CDs offer fixed interest rates.
Today, one of the best CD rates you can find is 5.50% APY, available from Nuvision Credit Union for an 8-month term on deposits up to $5,000. This competitive rate reflects the ripple effect of the Fed’s aggressive rate hikes that began in 2022. To put this in perspective, in late 2021, the top nationally available CD rates for terms of 6 months to 5 years were between 0.80% and 1.30% APY. After 11 Fed rate hikes that took place from 2022 to 2023, the top CD rates surged as high as 6.00%.
Though rates have dropped a bit since then due to Fed rate cuts, they’re still much higher than they were four years ago. If you invest $10,000 in a CD now, you could boost your nest egg by at least a few hundred dollars, depending on your term length and the interest rate.
For example, here’s what you could expect to earn based on the following CD options:
| Deposit Amount | APY | Term | Earnings |
| $10,000 | 5.50% | 8 months | $363.39 |
| $10,000 | 4.50% | 1 year | $450 |
| $10,000 | 4.00% | 2 year | $816 |
| $10,000 | 3.50% | 5 year | $,1876.86 |
Creighton University Finance Professor Robert R. Johnson, Ph.D., CFA, likes CDs because they are predictable.
“Income from CDs is known and certain,” he said. “That’s not the case with a portfolio of common stocks, where both the portfolio value and income stream from that portfolio are uncertain.”
However, before you deposit money into a CD account, Bobbi Rebell, founder of Financial Wellness Strategies, suggests you look into CD laddering.
“By building a CD ladder, you diversify the duration and, in turn, spread out the risk associated with locking in set returns,” she said.
Here’s how CD laddering works. Let’s say you have $10,000 to invest. You’ll want to divide it into equal parts, like five portions of $2,000, and deposit each portion into CDs with different maturity terms (such as 1 year, 2 years, 3 years, etc.). Once the shortest-term CD matures, you’ll reinvest that money into a new long-term CD.
Rebell said this helps ensure you always have liquidity and can take advantage of higher rates for a longer period of time.
If you set up the CD ladder right, you could be earning interest from CDs for years to come, helping to fund your retirement.
Don’t Forget To Name a Beneficiary for Your CDs
If you’re considering opening a long-term CD, like one with a 5- or 10-year term, make sure to name a beneficiary. A beneficiary is essentially the person who will inherit the account if you pass away. If something happens to you before the CD matures, the money can be transferred to your loved ones without going through probate.
You can select one beneficiary to receive the entire amount of your CD or multiple beneficiaries, with each receiving a portion. To name a CD beneficiary, your bank may ask you to provide information on the beneficiary’s full legal name, relationship to you, Social Security number, date of birth, address, and phone number. Check with your bank for more details on how to do so and if there are any specific rules you need to know.
How We Find the Best CD Rates
Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs to customers nationwide and determines daily rankings of the top-paying certificates in every major term. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), the CD’s minimum initial deposit must not exceed $25,000, and any specified maximum deposit cannot be under $5,000.
Banks must be available in at least 40 states. And while some credit unions require you to donate to a specific charity or association to become a member if you don’t meet other eligibility criteria (e.g., you don’t live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. For more about how we choose the best rates, read our full methodology.
