That’s why those near retirement often seek to transfer their more vulnerable assets to safer vehicles, such as annuity products or bank CDs. Although they are well aware of the erosive effects of inflation on their wealth, many retirees are afraid of losing money they don’t have time to replace. When there is economic uncertainty, most people crave safety, especially if they can retire in a few years. Said simply: In a shaky economy, safety rules. Despite historically low-interest rates, banks continue to tighten lending standards and aggressively avoid risk, making it more difficult for small businesses and individuals to borrow money. ![]() While this can be OK, it punishes those with large cash reserves parked in CDs or savings accounts, often causing them to take more risks with their money than they usually would. When the economy shows signs of faltering, the Fed typically cuts interest rates. ![]() George NewsĪside from the near-zero interest rates thanks to the Federal Reserve, people who save in traditional vehicles such as CDs and savings accounts face increased fees and potential institutional insolvency. ![]() Stock photo | Photo by Lari Bat/iStock / Getty Images Plus, St. FEATURE - While both bank certificates of deposit (CD) and annuities offer guarantees, the interest rate earned can be another story.
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