Building a Retirement Income with Bank CDs

Ally Bank CDs Help Provide Growth...and Less Stress in Retirement

September 2012

Retirement should mean more than retirement from work. As much as possible, it should also mean retirement from worrying about your finances. After working for decades, no one really wants to spend time fretting about retirement savings.

Bank CD deposits — which can provide a fixed rate of return along with the security of being insured by the Federal Deposit Insurance Corporation (FDIC) up to the maximum allowed by law — are a savings option that may help save you from worry, giving you more time to focus on the things that really matter, like friends and family.

And not only do bank CDs promote piece of mind, but adding them to your investment portfolio also follows the advice of many of the financial experts we've interviewed.

When you start out investing, many financial planners suggest putting more of your money in higher-risk, higher-return options like the stock market. But as you near retirement, they may advise putting more of your nest egg in financial products that aren't subject to dramatic swings in fortune.

In their financial guide Save Your Retirement, Frank Armstrong III and Paul Brown write: "Money that you will need in the next few years should not be in the world's stock markets; it should be in fixed income investments such as bonds and CDs."

The longer the term of a bank CD, the higher the rate of return usually is. This security can provide a worry-free part of your retirement income.

And if you're concerned that you'll miss out on a chance for higher returns by locking into a longer-term, you can "ladder" your CDs. This simply means dividing your savings equally into several CDs and staggering the terms so they mature at different times — some sooner, some later.

"Laddering protects you against both scenarios," says Nicholas LaVerghetta, a certified financial planner with NCM Capital Management, LLC, in Ramsey, New Jersey, who was recently interviewed by Ally Bank. "If rates do go higher, we have [bank CDs maturing that] we can reinvest at higher rates. And if rates go lower, we're going to benefit because we still have money invested at a higher rate."

Ally Bank provides an even more worry-free way to take advantage of any jump in interest rates through our Raise Your Rate CD, which provides the option to raise your rate should our rate on this CD go up for the term of your CD. (You may increase your rate once with a two-year term, or twice with a four-year term.) And because our rates are consistently among the most competitive in the country, based on rates as published by, using laddered Ally Bank Raise Your Rate CDs could help you build a steady, worry-free stream of income in retirement.

Learn more about Ally Bank CDs and get started at or call live customer care at 877-247-ALLY (2559), where help is available 24/7.

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