Retirement Planning/IRA renewal


Hello David,
I have a traditional bank IRA cd maturing in 2 weeks.($120,000)
Because of the unstable & low interest rates , I am confused as to where to reinvest this IRA.
The bank that it is held in is convincing me to reinvest in another 5 yr. IRA at a rate of 1.00%.
They are telling me that because I am over 80 Y.O. I would not need to pay to close this IRA before mature date should rates increase drastically & I choose to renew/reopen another IRA.
I am also thinking of renewing/transfer the IRA when matures to open a Internet bank Cd which is now paying 1.10%.
(I'm just having a hard time believing this #
Another option, not sure if this is wise, is to reopen,transfer with Vanguard.
I am a very conservative investor & at my age would not want to gamble.
If I believe that the bank that is now holding the IRA is truthful # can withdraw at anytime, for any reason at age 80), I would prefer to keep it there.
I would appreciate your thoughts to going forward.
Many thanks.

Hi Ang,
I understand your predicament. I really feel for people your age in this low interest rate environment. The CD rates are so low you are actually losing money because a 1% yield does not keep place with inflation. You are usually penalized on a CD for early withdrawal, however maybe your bank is telling you they will wave the fee as long as you keep the funds with them and open a new one. I think you have better options than a CD.

As far as I know, the only guaranteed account with Vanguard is a money market account which pays almost no interest. Actually much less than the CD. If you were to try for a higher return with them you would need to take some sort of risk and it doesn't sound like that's what you want.

From what you are telling me, it sounds like a fixed annuity would be your best option. Many fixed annuities have interest rates of 2-3% and some are higher depending on the guarantee period you choose. Annuities are very safe, actually safer than bank CD's. Your bank is not going to offer you an annuity because they make more money on the CD than by offering you an annuity through an insurance company.

Annuities have a surrender charge for early withdrawal within the guarantee period, however, virtually all of them will allow you a 10% free withdrawal every year. So your "required minimum distributions" each year will be free. Another feature that many annuities have added since interest rates have gotten so low, is the ability to move your money out with no penalty should interest rates rise. This is because of people like yourself worrying that they would lock into a low rate and rates would rise substantially. This applies to your principal amount only.

I hope this was helpful Ang. If you have any more questions feel free to ask. Best of luck!


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David M Iannopollo


I am a professional financial advisor who can assist you with answers on mutual funds, annuities, IRA's, rollovers, qualified and non-qualified retirement plans, retirement planning, educational planning, life, disability and LTC insurances. I can also show you how to take advantage of the stock market gains without the risk of loss!


I have over 25 years experience in the business and financial world.

Life experience has been my greatest education!

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