Retirement Income Needs: Are 1-Year IRA CD Rates Enough?

Great Rates. Open and Fund with Any Amount.

September 2012

When considering putting money into a 1-Year IRA CD, rates are probably the first thing people look into. While IRA 12-Month CD rates may vary among financial institutions, there's no denying that collecting any sort of interest on your savings is a good thing. But how do you know when an IRA 12-Month CD is your best option for saving, particularly when it comes to retirement? Is it worth getting a higher rate in exchange for not being able to touch that money for a longer period of time?

It All Depends on Your Goals.

1-year IRA CD rates are often lower than the rates attached to longer CDs, but that doesn't make them a less intelligent savings choice. One of the major benefits of a 12-Month IRA CD is that you only have to wait 12 months to access your funds.

Of course, with most IRA CDs you can access your money at just about any time, but doing so before the product has reached its maturity usually leads to significant early withdrawal penalties that eat away at your earned interest and possibly principal. In addition, IRA CDs may have tax consequences if withdrawn early.

On the other hand, when a 12-Month IRA CD reaches maturity, you have the option of either withdrawing that money or rolling it over into another IRA CD. For some people, this regular access and flexibility is a must-have benefit.

Another benefit to an IRA 12-Month CD from an FDIC-insured bank such as Ally Bank is that your funds are in a secure place, which is important to many people, especially in an uncertain economic climate. When you're talking about retirement savings, peace of mind is a definite plus.

And when the CD comes with the IRA 12-Month CD rate you find at Ally Bank, you're getting an annual percentage yield (APY) that's consistently among the most competitive available in the country, according to rates as published by Bankrate. After that year is up, you can then decide whether you want to renew the IRA CD, withdraw that money, or put it into a different product altogether, like an IRA 5-Year CD or an IRA Online Savings Account.

In addition to the High-Yield IRA 12-Month CD rate, Ally Bank offers a full range of IRA CDs that all come with competitive rates and can be opened with any amount. Take a look at all we have to offer and see how great it can be to bank with a direct bank. Visit or call live, 24/7 customer care at 877-247-ALLY (2559).

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