You spend years saving for retirement. It's only natural that you would want to keep those assets safe. As long as security is a priority, bank certificates of deposit (CDs) can play a key part in your retirement portfolio.

Many retirees want to have a varied, balanced retirement portfolio that includes not only stocks or bonds, but also some form of cash—another measure of security and stability. "CDs can play a good role with that," Frank Boucher, owner of Boucher Financial Planning Services in Reston, Virginia, says. "Many financial planners—and I'm one of them—believe that retirees should have at least a couple of years' worth of stable value assets to cover living expenses. Then, in the event that we have a big [stock] market downturn or something like that, they are not forced to sell securities at reduced prices.”

The Obvious Advantages of Bank CDs

Bank CDs typically have a higher interest rate than savings accounts. At the same time, they offer simplicity and predictability. You know the rate you are getting and the amount you will have when the bank CD reaches maturity. Moreover, when you choose an FDIC-member bank, your funds are insured up to the maximum allowed by law. All in all, bank CDs provide a simple way to maintain retirement cash and some peace of mind, while earning interest on your principal deposit.

Building Flexibility Into Retirement Savings With Bank CDs

One way to use bank CDs in retirement is to set up a series of CDs with different maturity dates, in a strategy known as a "ladder." The approach lets you create a regular cash flow or move money into new CDs if interest rates go up. A CD ladder can be useful for several reasons:

  • It can help you prepare for major expenses that you know are going to be part of your financial future, like a down payment on a house, or a child's education.
  • You could use CDs as the cash foundation of a life-after-work long-term portfolio.
  • You can use CDs as a place to store money for smaller expenses like non-urgent home maintenance and repairs, or even property taxes.

In addition, you may also consider bank CDs such as the Ally Bank Raise Your Rate CD. With these CDs, you have the option of a one-time rate increase if our 2-Year CD rate goes up; you have the option to increase your rate twice (two times) if our 4-Year CD rate goes up. That way, you're not sacrificing the potential of a higher APY in exchange for the security of a longer-term CD.

Not All CDs are Bank CDs

When it comes to a retirement portfolio, reduced risk is one of the key benefits of having bank CDs. However, the risk level may not be the same for all the CDs that are now on the market. "Not all CDs are issued by banks," says Chad O'Brien, a Certified Financial Planner® with Lassus Wherley, a financial management firm in New Providence, New Jersey. He explains that there are a lot of brokers now offering CDs that aren't included in your FDIC-member bank insurance coverage. As a result, he points out, it's probably a good idea to make sure the CD issuer is an FDIC-member bank.

Ally Bank offers CD rates that are consistently among the most competitive in the country. You can open and fund your account with any amount. Plus, the Ally Ten Day Best Rate Guarantee gives you the best rate we offer for your CD during the first ten days starting with your open date if you fund your CD within that time.

See how Ally Bank CDs can fit into your retirement goals. Learn more at or call live, 24/7 customer care at 877-247-ALLY (2559) today.

View CD Rates