I like long-term CDs. They earn a guaranteed rate of return, the APY won't change, and they can help you meet long-term savings goals. In a world full of questionable financial options, they're among the most dependable things you can get.

Yet, timing when to open one is imperative. Locking in a rate now, with the current 3.50% inflation rate as a permanent ceiling, will likely prove short-lived, which means inflation might erode some of your future purchasing power. With the ongoing war in Iran raising gas prices again, expect inflation to follow suit.

On top of this, the Federal Reserve is currently holding steady. However, if the bond market tightening doesn't bring down inflation through higher borrowing costs, they may be forced to hike rates — meaning today's locked-in rates could quickly look like a missed opportunity. With that in mind, here is the short-term strategy I'm currently using, as someone who checks and analyzes savings rates for a living, to stay flexible as the market settles.

Short-term CDs provide the dependability and flexibility you want now

I recommend a short-term CD in the interim. With one, you'll have all the benefits you come to love about CDs, with quick access to your cash.

They work best if you have an emergency fund already established and don't need to touch your money during the term. If you have to break it open for any reason, you'll lose some of your earnings to early termination fees. Thankfully, with terms that accommodate all savings goals, you can find the best fit for your goals and cash flow.

Use this Bankrate tool to shop for and compare the best CD rates quickly:

Having quick access to your cash is important because if inflation continues to creep back up, you might want to revisit where you invest your cash when the CD matures. And if the Federal Reserve decides to hike rates later this year, it places you in an excellent position to capitalize on higher returns.

Does waiting really make that big of an impact?

Timing matters when choosing the right savings account. And knowing when to lock in a long-term CD can be the difference between earning hundreds to thousands of dollars more.

To demonstrate, say you locked in a $50,000 five-year CD at 4.00%. You'll earn $10,832.65. However, if you wait a few months and the Fed hikes rates, you could have access to higher returns. A five-year CD at 4.25% APY will earn you $11,567.33, a difference of almost $735, just for waiting a few months.

That's pretty significant, and it's one of the reasons why I would wait on a longer-term CD. On the other side of the coin, you might be thinking, well, would waiting hurt me? After all, what happens if CD rates drop in the interim?

Rest assured, I don't see that happening any time soon. I review CD rates biweekly and have found that some banks have raised CD rates. Here are some of the ones I found recently that rose:

And with inflation so high, cutting the federal funds rate would not be a sound strategy to curb rising costs. While waiting carries the risk of returns remaining flat, the potential upside of a higher rate makes this strategy a smart move in this environment.

Ultimately, short-term CDs are the better play right now. They provide a safe place to park your cash while the economic landscape settles, without locking you into a long-term commitment. By prioritizing terms that keep your money accessible, you're not just earning a competitive term — you're maintaining the flexibility to pivot as soon as better opportunities arise.

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For nearly three decades, financial planning experts relied on a 30-year benchmark: retire at 65, and your money will last to age 95. However, medical advancements, earlier career exits, and active longevity have shifted the baseline.

According to Social Security Administration (SSA) data, a 65-year-old married couple has about a 50% chance that at least one partner will live past 90, and a 20% chance of reaching 95. So, preparing for a 40-year retirement is becoming the new normal for many.

Yet while most investors recognize that living longer requires a larger nest egg, few might account for how a four-decade timeline reshapes the tax landscape. Stretching a retirement portfolio across that span exposes wealth to escalating forced withdrawals, Medicare surcharges, and bracket jumps that standard 30-year models might not capture.

Here are the primary financial and tax risks of a potential 40-year retirement — and how you might adapt your strategy accordingly.

Financial Risks

1. The compounding math of inflation

Across a 30-year period, inflation is already a hassle to deal with. But over 40 years, it can significantly degrade your purchasing power.

A quick way to visualize this decay is the "Rule of 72." This rule states that, at a modest 3% annual inflation rate, your buying power is cut in half roughly every 24 years. By year 40, a single dollar retains barely 30% of its original value, as shown in the table below.

So, a lifestyle that costs $100,000 at age 60 could require over $326,000 annually by age 100 to maintain the same standard of living, assuming a flat inflation rate (though, of course, economic periods fluctuate — more on that below).

2. Exposure to more market downturns

Historically, the S&P 500 Index enters a bear market (a decline of 20% or more) roughly once every 4 to 5 years. While market cycles are unpredictable, these historical patterns suggest that over a typical retirement:

• A 30-year plan will navigate between 6 and 7 bear markets.
• A 40-year plan must survive 8 to 10 major downturns.

Naturally, when these downturns occur matters just as much as how many you face.

Research on sequence-of-returns risk shows that a severe crash in the first three years of retirement is far more damaging to a portfolio’s longevity than one occurring two decades later.

Extending your retirement to 40 years compounds this vulnerability in two ways. 1) It doubles your chances of starting retirement during a market trough. 2) Even if you survive an early crash, adding a fourth decade increases the odds of a second prolonged downturn later in life — when years of withdrawals have already left your portfolio with less capital to recover.

3. A multiple-decade healthcare horizon

In a typical 30-year plan, healthcare and long-term care expenses are frequently modeled as a late-stage spike occurring in the final three to five years of life.

But in a 40-year plan, medical expenses can become a multi-decade expense.

Fidelity recently reported in its annual Retiree Health Care Cost Estimate that a single 65-year-old retiring today can expect to spend an average of $185,500 (or roughly $371,000 for a couple) out of pocket on healthcare throughout retirement (and that assumes standard Medicare coverage without long-term care needs).

Comprehensive long-term care or extended medical needs over 40 years can push total healthcare expenditures well beyond $600,000 for a couple, far outpacing general consumer price index (CPI) inflation rates.

Managing these financial risks over 40 years requires careful portfolio drawdowns. But withdrawing more capital to keep up with inflation and healthcare introduces a secondary threat: triggering a domino effect of late-life tax penalties.

Tax Risks

1. The RMD expansion spike

When you save money in a traditional IRA or 401(k), the government lets you defer paying income taxes on it right away. But they won't wait forever.

Under current law (SECURE 2.0), starting between ages 73 and 75, the government enforces a rule called a required minimum distribution (RMD). This rule requires you to withdraw a set amount each year so they can tax it.

The catch? The older you get, the bigger the percentage you are forced to take out.

The IRS divides your account balance by a life expectancy divisor that shrinks every year you live. Because you divide by a smaller number, the required withdrawal percentage spikes as you age:

• Age 75: Divisor 24.6 (~4.07% of balance mandatory withdrawal)
• Age 85: Divisor 16.0 (~6.25% of balance mandatory withdrawal)
• Age 95: Divisor 8.9 (~11.24% of balance mandatory withdrawal)

If tax-deferred accounts compound undisturbed for 15 to 20 years before RMDs begin, a $1.5 million balance at age 60 could easily grow to over $3 million by age 80.

A forced 6.25% withdrawal on $3 million means $187,500 in mandatory taxable income in a single year. This extra income can push you into higher tax brackets and exceed your actual lifestyle cash-flow needs.

2. The survivor or 'widow's tax' penalty

When one spouse passes away during a multi-decade retirement, the surviving spouse often inherits the combined balance of tax-deferred accounts. However, their tax filing status changes from married filing jointly to single the next year after their spouse passed away.

Single federal tax brackets are approximately half as wide as joint brackets for the same rate tiers. The result? Higher taxes on the surviving spouse, also known as the "widow's tax" penalty.

• For example, the threshold to enter the 24% or 32% single federal tax bracket is roughly half the dollar amount allowed for joint filers.
• The impact is that the surviving spouse receives nearly the same mandatory RMD income stream from inherited accounts, but pays higher marginal tax rates at much lower income levels. Over a 40-year horizon, this survivor penalty can erode wealth when late-life health costs peak.

For more information, check out Kiplinger's report, Avoiding the Widows' Penalty Tax Trap After a Spouse Passes.

3. Social Security 'tax torpedo' and IRMAA surcharges

During a standard 30-year retirement, tax traps are often viewed as short-term hurdles in late life. With a 40-year projection, however, decades of tax-deferred growth force larger required distributions, which can subject your wealth to multi-decade tax penalties:

Social Security tax torpedo. The IRS determines Social Security benefit taxation using a figure called "provisional income."

• This is basically your adjusted gross income (AGI) plus tax-exempt interest and 50% of your Social Security benefits.
• By increasing provisional income with, say, higher RMDs, up to 85% of your Social Security benefits may become subject to federal income tax.
• For instance, taking just $1,000 extra from an IRA can expose up to $850 of Social Security benefits to taxation, effectively pushing your marginal tax rate above 40%.

IRMAA Medicare surcharges. Realized capital gains or large IRA withdrawals can also cross Medicare's income-related monthly adjustment amount (IRMAA) thresholds.

• In 2026, the first IRMAA threshold begins at $109,000 for single filers and $218,000 for joint filers. (Because Medicare uses a two-year tax lookback, your 2026 premiums are actually determined by your modified adjusted gross income (MAGI) from your 2024 tax return.)
• Because IRMAA uses strict "cliff" thresholds rather than marginal tiers, crossing these thresholds by as little as $1 can cost you thousands in retirement through full monthly premium surcharges on Part B and Part D for both spouses.

Absorbing high-tier IRMAA surcharges ($6,900 to $13,800+ annually for a couple) over 15 to 20+ years, rather than just a few final years, can dramatically accelerate portfolio depletion in your 80s and 90s.

Related: 7 Ways to Plan Now to Save on Medicare IRMAA Surcharges Later.

Update Your Tax Plan

Although minimizing your taxes on a four-decade retirement plan isn't everything, avoiding taxes can help you control your tax brackets across different life phases.

Below are a few strategies that may help protect a 40-year portfolio (though this list is certainly not exhaustive; be sure to consult a qualified tax professional regarding your specific situation).

1. Maximize the 'gap years' with strategic Roth conversions

The period between your career exit and the start of Social Security and forced RMDs (typically ages 60 to 73 or 75) can be used as a valuable planning window. During these relatively "low" income periods, your marginal tax rate might be lower than when you were working.

Instead of letting this low-tax window go to waste, you can try a multi-year Roth conversion.

How it works: Suppose a retired couple (both born in 1960 or 1961) pays $80,000 in annual living expenses from savings, which generates $2,200 in high-yield taxable interest income.

To capitalize on this temporary "tax valley," they convert $100,000 from a traditional IRA to a Roth IRA in 2026:

• Gross income: $102,200 ($100,000 conversion + $2,200 interest)
• Deductions: -$35,500 (2026 standard deduction for joint filers 65+)
• Net taxable income: $66,700

This taxable income figure of $66,700 falls squarely into the lowest federal tax tiers — the 10% and 12% brackets (which max out at $100,800 for joint filers in 2026).

Paying this relatively low tax rate today permanently shifts those funds into tax-free Roth status.

By the time RMDs kick in at age 75, the couple’s traditional IRA balance is substantially smaller, suppressing forced distributions, mitigating the Social Security tax trap, and shielding them from higher tax brackets in their 80s and 90s.

Related: 6 Tax Reasons to Convert Your IRA to a Roth (and When You Shouldn't).

2. Treat your HSA as an extended-life medical account

Health savings accounts (HSAs) offer an unmatched triple-tax advantage: contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are 100% tax-free.

In 2026, individuals can contribute up to $4,400 (or $8,750 for family coverage), plus a $1,000 catch-up contribution for those age 55 and older. (Provided they are not yet enrolled in Medicare, which stops all active HSA contributions).

Furthermore, expanded 2026 eligibility rules now include certain catastrophic marketplace plans and direct primary care (DPC) arrangements alongside traditional high-deductible health plans (HDHPs).

How it works: Instead of spending HSA funds as medical bills arise during your working years, pay those bills out of pocket, digitally scan and back up the receipts, and leave the HSA invested in low-cost index funds. Over 20 to 30 years, an HSA balance can grow into a multi-hundred-thousand-dollar tax-free health fund.

• Then, when late-life healthcare costs inevitably rise in your 80s or 90s, you can draw from the HSA completely tax-free to cover doctor bills and long-term care.
• This eliminates the need for extra traditional IRA distributions, keeping your taxable income low and protecting your core retirement portfolio.

3. Establish a three-bucket asset location model

A 40-year portfolio may need more spending flexibility than a 30-year window. To help navigate market cycles over four decades, structure your wealth across three distinct tax environments:

How it works: Having balanced amounts across all three buckets allows you to "blend" annual withdrawals. For example, if you need an extra $10,000 in a given year for a home improvement or medical event, withdrawing that money from a Roth account or using unrealized cash/principal from a taxable brokerage account may keep your taxable income from crossing an IRMAA cliff or perhaps triggering higher Social Security income taxes.

A quick warning on taxable accounts: Liquidating appreciated stock in a taxable brokerage account to generate cash triggers realized capital gains tax. These gains increase your modified adjusted gross income (MAGI), which can inadvertently trigger an IRMAA surcharge.

Furthermore, high earners should watch out for the 3.8% net investment income tax (NIIT), which sits on top of capital gains tax rates and can push your total capital gains tax rate up to 23.8%.

The bottom line

Living to 95 or 100 should be celebrated without fear of financial liability. But stretched over four decades, tax drag becomes a compounding weight on your portfolio if you rely on an outdated 30-year model.

Thus, achieving a 40-year retirement isn't just about accumulating a larger total sum — it's about controlling when, where, and how you pay the IRS over the next forty years.

By converting pre-tax assets early, building multi-bucket flexibility, and leveraging tax-free accounts like Roths and HSAs, you might help ensure your wealth lasts as long as you do.

This article does not cover state income tax and is for educational purposes only. The content does not constitute financial, legal, or tax advice.

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As someone who reviews savings accounts and inflation for a living, it's become easier to see where things are heading. Understanding how these trends move can be the difference between keeping your money in the right account and missing opportunities to maximize growth.

Case in point, inflation remains stubbornly high, and ongoing tensions in the Middle East could keep pressure on energy prices. David Payne of the Kiplinger Letter projects inflation will be around 4.0% to end the year. If higher inflation persists, it could eventually force the Federal Reserve to hike rates. For now, though, the Fed left its benchmark interest rate unchanged at 3.5% to 3.75%, signaling that policymakers are still waiting for clearer evidence that inflation is moving back toward its 2% target. For savers, the Fed's decision means today's high-yield savings accounts and CDs remain attractive options, though the next move will depend on how inflation evolves.

Navigating these shifts is the difference between letting your money stagnate and putting it to work. If you have $10k sitting on the sidelines, here are the smartest places to park it — and the traps you need to avoid.

The smartest places to park your cash in the interim

First, if you're building an emergency fund or have short-term savings goals that require liquidity, a high-yield savings account will be the best option. And when you're looking for one, I recommend finding an account earning at least 4.00% APY, since that's likely where inflation will remain for the foreseeable future.

Based on my research, this savings account is a home run option:

Meanwhile, if you have an emergency fund and don't require any liquidity, I would recommend a short-term CD. Look for options between three and six months, since if a rate hike happens, it will likely be in the fall or winter.

If it does, it puts you in prime position to capitalize on even higher rates when your CD matures. Use this Bankrate tool to compare and find the best solution for your money:

Another positive about this approach is that if the Fed doesn't hike rates and inflation remains high, you have flexibility to decide where to hedge your cash in the near future.

Whether that's renewing your existing CD or putting money in the market, you won't have to worry about your future purchasing power eroding due to inflation.

These are the savings accounts I would cautiously consider

Long-term CDs are cozy solutions. After all, once you open one, you're guaranteed to earn that APY no matter what happens. If you're approaching retirement and are concerned about market volatility, it can be a smart approach.

Here are some of the top options I found to help you:

One thing to remember is that the longer your money sits in a CD, the more susceptible it could be to losing future purchasing power if inflation continues to rise. So these options work best for savers with an emergency fund, short-term savings and retirement goals all either fully funded or on course to be.

Avoid this savings trap

The only savings accounts I don't recommend using right now are those at brick-and-mortar banks, where your APYs will be much lower than the current inflation rate of 3.50%. This means every dollar you have in one of these accounts loses purchasing power every month you keep it there.

That said, some local banks do offer higher returns on money market accounts or CDs if you deposit enough money into them, usually between $10,000 and $25,000. So, if you're in a position where you don't feel comfortable moving away from your local bank, ask about any savings incentives they have that can help you.

Ultimately, managing your cash effectively requires a strategic approach. Take a moment to audit your current accounts against the 3.50% inflation rate.

By prioritizing high-yield options that keep your money working for you, you can strike a balance between liquidity for immediate needs and growth to hit your long-term targets. You'll also protect your purchasing power and make the most of your $10k savings.

The right savings strategy is a strong starting point, but a financial professional can help you build on that foundation with a personalized plan for your long-term goals.

Use the tool below to connect with a financial advisor and get started today:

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The original Financial Independence, Retire Early (FIRE) movement paved a path to early retirement through aggressive saving and extreme frugality. Today, many people view FIRE as a way to gain financial independence and flexibility, rather than retiring as early as possible.

Many early FIRE advocates aimed to save 50% to 75% of their income, working toward a goal of accumulating about 25 times their annual expenses before retiring.

But in today's world of high housing prices, inflation and healthcare costs, the FIRE movement might feel impossible. While some individuals may have found financial independence through the FIRE movement, there's a shift in the movement and in how people approach financial independence.

Why the FIRE movement is changing

The FIRE movement was popularized in the 1990s, but today's economy is vastly different, and the conversation has shifted from early retirement to financial flexibility.

Take the housing market, for example. According to the National Association of REALTORS, the median existing-home sales price was $114,600 in 1995. By 2023, the median price had climbed to $389,800. Simply buying a home now requires more of your paycheck, making it much harder to save 75% of your income under a traditional FIRE strategy.

Inflation has created additional financial strain, and tariffs and geopolitical tensions have contributed to higher costs for some goods. Healthcare costs have also skyrocketed. According to the Peterson-KFF Health System Tracker, which uses Centers for Medicare and Medicaid Services data, in 1990, annual per-person health spending averaged $2,835 in 1990, or $5,864 when adjusted for inflation. By 2024, per-person annual spending averaged $15,474.

In short, Americans have less left in their paychecks after paying for essentials like housing, food and healthcare. In many cases, consumers are increasingly prioritizing financial stability rather than planning for an early retirement.

Coast FIRE vs. traditional FIRE

Several variations of the FIRE movement exist. The traditional FIRE strategy focuses on building a large portfolio that can fully fund your retirement early, requiring you to save aggressively and potentially change your lifestyle to reflect your early retirement goals.

The Coast FIRE strategy takes a more moderate approach to save enough money early, so your investment portfolio can compound and support your retirement. Once you've amassed enough savings, you might continue to work to cover your living expenses, but early retirement isn't usually the goal. Since you won't be withdrawing from your investment portfolio early, the Coast FIRE strategy may be a more conservative option because it doesn't rely on withdrawing from investments decades before traditional retirement.

If you choose to pursue the Barista FIRE strategy, you'll work to build your savings and ultimately quit your traditional job. From there, you'll combine part-time work with your savings. Many people pursuing Barista FIRE choose to reduce their expenses so part-time income is enough to cover their living costs. Given the availability of freelance and gig work, this strategy may be a solid option for some, but you'll need to consider the limitations and expenses of securing health insurance without full-time employment.

How much money do you need to make work optional?

The amount of money that you'll need to make work optional will depend on everything from your lifestyle to your location and age.

Many individuals use the rule of 25 to determine how much they’ll need in investments to be able to retire. A commonly cited guideline suggests accumulating investments equal to about 25 times your annual expenses. The guideline is based on the widely known 4% rule, which suggests a retiree may be able to withdraw about 4% of a diversified portfolio annually, though there's no guarantee it will work in every market or retirement scenario.

Following the rule of 25, if you make $100,000 a year, you would need approximately $2,500,000 in investments to make working optional. In that situation, the guideline would suggest an initial annual withdrawal of about $100,000.

Emergency savings and retirement assets play a role, too. It's advisable to have at least three to six months of your living expenses in emergency savings. Your retirement assets may play a role, too. In addition to building up 401(k)s and Roth IRAs, consider how other assets, like Health Savings Accounts and rental properties, might support you financially once you no longer work.

Identifying the right balance of assets and the ideal amount of money you need to retire can be tricky, so consider consulting with a financial advisor.

Use the Bankrate tool below to connect with a financial professional who can help you tailor a strategy to reach your retirement goals:

Why many people keep working after reaching financial independence

Becoming financially independent and having the option to retire may sound appealing, but many financially independent individuals choose to continue working.

That's because some individuals enjoy their careers and find their work fulfilling. Some want the social engagement that comes with a career, while others may prefer having the additional income that they're able to generate.

Even if you choose to continue working, having the option to retire on your own terms can be a reassuring milestone.

Is financial independence realistic for average earners?

While reaching financial independence may take longer for average earners, many people can make meaningful progress through consistent saving, investing and keeping expenses under control.

To achieve financial independence, you may need to start early on in your career, and you'll need to be willing to live modestly. Focus on making consistent contributions to your retirement accounts and accumulating emergency savings in a high-yield savings account where your money can earn maximum interest.

Taking steps to increase your income will also help. Look for promotions and overtime opportunities, and consider taking on a side hustle where you can put your skills to work to earn extra money.

Perhaps most importantly, make a budget and stick to it. Your budget may help you identify ways you can cut spending and save money. By consistently living below your means, you can put your money to work for you and lay the pathway toward financial independence.

Financial independence can mean more than retirement

Becoming financially independent doesn't necessarily mean you'll retire early. Instead, it gives you the freedom to decide if, when and how you want to work. Rather than focusing on reaching a specific retirement age, financial independence offers greater flexibility, security and peace of mind — benefits that can be just as motivating as the prospect of early retirement.

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Chances are, you've been with the same bank for years. After all, it's easier to stick with the checking account you have now than to switch to a new one. But every once in a while, it's worth looking at what else is out there.

Even if you're mostly satisfied with your current bank, you may find that a different one better fits your needs, whether with lower fees, higher interest rates, superior in-person services, or more-attractive premium account packages that layer on the perks as your wealth grows. Or you may choose to stick with your current institution for everyday banking and open a savings account or certificate of deposit at an online bank or credit union, taking advantage of high yields on your extra cash.

You'll find plenty of great options to consider here. With the help of LendingTree, which collects deposit-account information, we've analyzed interest rates, fees, balance requirements and other features of accounts at national banks, credit unions, online banks and regional banks, and we've named winners in each of those categories. We've also highlighted two institutions that may be strong choices for customers in each of four profiles: Retirees, high-net-worth clients, travelers and families with kids.

For regional banks, we chose one winner in each of four areas: The Northeast, the Midwest, the South and the West. Interest rates change frequently, so before you commit to any of these accounts, check the current yield. Yields and other terms listed here are as of early July.

Regional banks have between $10 billion and $100 billion in assets and serve specific areas. As a result, they often have more-personalized customer service than you may find with a national bank, and they often reinvest money into the community.

Best in the Northeast: ConnectOne Bank

Where it is: More than 60 locations across New York, New Jersey and South Florida.

Totally Free Checking is, as the name implies, free of monthly fees. It's a simple account, but it allows customers to send money via Zelle. Simply Better Checking also charges no monthly fee, and it reimburses up to $10 monthly in out-of-network ATM fees if you use direct deposit and maintain a $500 average daily balance.

Consumer Interest Checking yields 1.15% on balances of $1,000 or more, and it reimburses up to $10 a month in ATM surcharges if you use direct deposit and have an average daily balance of $1,000. (By keeping your balance at $1,000 or more, you'll also skip the $10 monthly fee.)

Among ConnectOne's savings options, Connect Money Market has a 2% yield, or 2.1% for balances above $25,000. It requires a $1,000 minimum opening deposit, and you need to maintain an average daily balance of at least $5,000 to avoid the $10 monthly fee. Connection Plus Savings offers a 3% yield on balances of at least $2,500, and the CDs come with a relatively low deposit requirement of $500. The four-month penalty-free certificate pays 4%.

Best in the Midwest: Old National Bank

Where it is: About 350 locations in Illinois, Indiana, Iowa, Kentucky, Michigan, Minnesota, North Dakota, Tennessee and Wisconsin.

Old National has four popular checking-account options, including one for students and another for customers 50 and older. ONB Everyday Checking is the basic account for everyday needs, and a recent promotion offered a $600 bonus for signing up and making $12,000 in direct deposits in the first four months. The account comes with a $6.95 monthly fee, but you can get it waived with $500 in monthly direct deposits, a daily balance of $500, a $1,500 daily balance across all qualifying accounts with Old National, or 15 or more debit card transactions during the statement cycle.

ONB Preferred Checking offers free standard checks, and the bank won't charge you for the first five monthly transactions at out-of-network ATMs (but you may pay fees to the ATM operator). Preferred Checking has a $15 monthly charge, but it goes to zero if you have a daily balance of $5,000 in the account or $25,000 across all eligible accounts.

Old National offers a variety of savings options, including a savings account for kids. Among CDs, one with a four-month maturity recently had a 4% yield, with a $500 minimum deposit requirement.

Best in the South: FirstBank

Where it is: About 90 branches across Tennessee, Kentucky, Alabama, Georgia and North Carolina.

Essential Checking includes the basics for no monthly fee, while the free FirstRewards Checking pays a yield of 1.51% on balances up to $25,000 (0.55% on the portion of the balance higher than that) if you meet certain monthly requirements: making 10 debit card purchases, having one qualifying transfer into or out of the account, and receiving e-statements. The account also refunds out-of-network ATM fees.

Swipe Smart Checking, another free account, may make sense for people opening their first account or students who primarily use a debit card (the account doesn't offer paper checks). Other checking accounts include USA Checking for Seniors, for those 62 and older, and Interesting Checking ($8 monthly fee if your balance falls below $1,000), offering a yield of 0.41% on balances of $1,000 to $24,999, 0.45% on balances of $25,000 to $49,999, and 0.5% on higher balances.

For savers, FirstBank's options include FirstUp Savings, yielding 3.82% on up to $25,000. The bank waives the $5 monthly fee if you have a minimum balance of $50. The six- and 30-month CDs ($500 minimum deposit) yield 3.8%, and the Consumer Fed Funds Money Market account recently paid 1.46% on balances up to $99,999, and 2.93% on higher balances (you avoid the $10 service fee if you have an Essential Checking account or keep at least $100,000 in the money market account).

Best in the West: WaFd Bank

Where it is: More than 200 branches across Arizona, California, Idaho, Nevada, New Mexico, Oregon, Texas, Utah and Washington.

Free Checking is WaFd's basic checking account, and Rewards Checking is an elevated version that comes with a $6 monthly fee in exchange for perks such as a discount of 5 cents per gallon on gas at Shell stations, cell phone insurance, free access to the Greenlight program for managing money with kids, and a credit-monitoring service.

Premium Rewards Checking has a $9 monthly fee but comes with more benefits, including dark-web monitoring, 24/7 roadside assistance and telehealth services. Interest Checking offers those benefits plus a yield as high as 0.25% (on balances of $250,000 or more). It waives the $12 monthly fee if you have a $5,000 average daily balance or $50,000 across eligible accounts with WaFd.

WaFd's Savings account, yielding 0.1% on balances of at least $100, is free for minors; otherwise, you can avoid the $3 monthly fee by maintaining a balance of at least $100. Start Savings offers a 5% yield on a balance up to $500, 2.47% on the portion of the balance between $500 and $1,000, and 0.1% on larger amounts. (To open this account, you must have a WaFd checking account.)

If you're looking for better yields on big balances, check out the money market accounts, such as the High Yield Money Market (yielding as much as 2% on $500,000 or more) and CDs. Recently, a certificate with a seven- or 13-month maturity yielded 4% ($1,000 minimum deposit).

Use the Bankrate tool below to connect with a financial professional who can help you build a strategy to reach your personal finance goals:

Methodology

With data from LendingTree, which collects deposit-account information, as well as from financial institutions and other sources, we evaluated national banks, credit unions, online banks (including online accounts from brokerage firms) and regional banks. We reviewed checking accounts, savings accounts, money market deposit accounts and certificates of deposit.

We looked at features including interest rates; minimum deposit and balance requirements; monthly maintenance fees and the ease of waiving those fees; ATM benefits, such as waived or reimbursed fees for out-of-network withdrawals; free or discounted benefits, such as personal checks, cashier's checks, paper statements and overdraft-protection transfers; overdraft fees; and online and mobile banking features, such as the availability of peer-to-peer payment services. Yields and other data listed in the article are as of early July.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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Each week in our Ask the Editor series, Joy Taylor, The Kiplinger Tax Letter editor, answers questions on topics submitted by readers. This week, she's looking at four tax questions from readers on the taxation of I bonds in various situations. (Get a free issue of The Kiplinger Tax Letter or subscribe.)

1. Buying and owning I bonds

Question: I am thinking about buying I bonds for the first time. I heard that holders of I bonds get generous tax breaks. What are the tax consequences of owning these bonds?

Joy Taylor: I bond buyers have a choice when they acquire the savings bonds. They can pay federal income tax each year on the interest earned or defer the tax bill to the end. Most people choose the latter. They report the interest income on their Form 1040 for the year the bonds mature (generally, 30 years) or when they're cashed in, whichever comes first.

Deferring tax on the full amount of accrued interest for up to 30 years may sound like a great idea until you get the tax bill for three decades' worth of interest. Also, taking the tax hit all at once can push you into a higher federal income tax bracket, making the tax bill even more expensive than it needed to be.

Interest earned on I bonds is exempt from state and local taxation.

2. Gifting an I bond you own

Question: I own about 50 I bonds that will begin to mature in 2030. I elected to defer taxation of the bonds' accrued interest until maturity. I am considering giving some of the I bonds to my grandchildren before they mature. If I do this, can I avoid paying federal income tax on the deferred interest?

Joy Taylor: Nope, this will not work taxwise. Making a gift of an I bond before maturity will accelerate taxation of the interest income. Giving away bonds you already own to someone else doesn't get you off the hook with the federal government for owing tax on previously untaxed interest. Even if the bonds are reissued in the gift recipient's name, you're still taxed on all that interest in the year of the gift.

3. I bonds used for education

Question: I have owned I bonds for many years. I heard that if I cash in the bonds and use the bond proceeds for higher education for my children, then I won’t have to pay tax on the interest when I cash them in. Is this true?

Joy Taylor: It depends on whether you meet all of the rules. One way to avoid paying federal income tax on accrued I bond interest is to cash in the bonds on or before the maturity date and use the proceeds to help pay for college or other higher education expenses for you, your spouse or your dependent. Note that there are lots of hurdles to jump over to be able to take advantage of this tax perk. Here are some of them:

• You must have purchased the bonds after 1989 when you were at least 24 years old.
• The bonds must be in your name only.
• The bonds must be redeemed to pay for undergraduate, graduate or vocational school tuition and fees for you, your spouse, or your dependent (grandparents cannot use this tax break to help pay for their grandchild’s college tuition unless the grandparents can, on their Form 1040, claim the grandkid as a dependent).
• Room-and-board costs aren’t eligible for the exclusion.
• The exclusion is subject to strict income limits. For 2026, it begins to phase out at modified adjusted gross income (MAGI) of more than $152,650 for joint filers and completely phases out at MAGI of $182,650. For all other filers, the phase-out range for 2026 is $101,800 - $116,800. These figures are adjusted for inflation each year, so they would be higher for 2027 and so forth. MAGI for this purpose starts with the AGI on line 11 of your Form 1040 (figured without taking into account any I-bond interest exclusion). Then you add back any tax breaks from working abroad, the exclusion for employer-provided adoption assistance and any deductions for student loan interest.

If the proceeds from all I bonds cashed in during the year exceed the qualified education expenses that you pay for the year, the amount of I bond interest you can exclude is reduced proportionally. You would use IRS Form 8815 to compute your MAGI and the amount of any I-bond interest exclusion that you would be entitled to.

4. Inherited I bonds

Question: I inherited I bonds this year from my father, who recently passed away. It is my understanding that my dad elected to defer being taxed each year on the I bonds during his lifetime. Do I have to report all the accrued, deferred interest on my federal tax return?

Joy Taylor: It depends. The executor of a decedent's estate can choose to include all pre-death interest earned on the bonds on the decedent's final income tax return. If this is done, the beneficiary reports only postdeath interest on Form 1040 for the year the bonds mature or are redeemed, whichever comes first.

If the executor doesn't include the interest income on the deceased owner's final federal income tax return, the beneficiary will owe taxes on all pre-death and post-death interest once the bond matures or is redeemed, whichever is earlier.

About Ask the Editor, Tax Edition

Subscribers of The Kiplinger Tax Letter, The Kiplinger Letter and The Kiplinger Retirement Report can ask Joy questions about tax topics. You'll find full details of how to submit questions in each publication. Subscribe to The Kiplinger Tax Letter, The Kiplinger Letter or The Kiplinger Retirement Report.

We have already received many questions from readers on topics related to tax changes in the One Big Beautiful Bill, retirement accounts and more. We will continue to answer these in future Ask the Editor roundups. So keep those questions coming!

Not all questions submitted will be published, and some may be condensed and/or combined with other similar questions and answers, as required editorially. The answers provided by our editors and experts, in this Q&A series, are for general informational purposes only. While we take reasonable precautions to ensure we provide accurate answers to your questions, this information does not, and is not intended to, constitute independent financial, legal, or tax advice. You should not act, or refrain from acting, based on any information provided in this feature. You should consult with a financial or tax advisor regarding any questions you may have in relation to the matters discussed in this article.

More Reader Questions Answered

• All Ask the Editor Q&As
• Ask the Editor: Will I be Audited by the IRS?
• Ask the Editor: Tax Basis in Inherited Property
• Ask the Editor: Estimated Tax Payments and Withholding
• Ask the Editor: 10-Year Rule for Inherited IRAs
• Ask the Editor: Tax Questions on Roth IRA Conversions
• Ask the Editor: Tax Rules for Landlords

A major tax question surrounding new Trump Accounts has now been answered by the IRS.

The federal tax agency recently issued guidance clarifying how contributions to the children’s savings accounts will be treated for federal gift tax purposes. This clarification comes as the accounts officially launched on July 4 with a full-court press on July 6.

Here's more of what you need to know.

Trump Accounts $1,000 seed money

"Trump Accounts" were created under the 2025 Trump-GOP tax overhaul as a new tax-advantaged savings vehicle for kids.

• Eligible children born between Jan. 1, 2025, and Dec. 31, 2028, may receive a $1,000 federal contribution if an account is opened on their behalf and program requirements are met.
• In addition to the federal seed deposit, parents, grandparents, employers, charitable organizations, and others can contribute cash or eligible assets, subject to annual limits and program rules.
• The money is invested and grows on a tax-advantaged basis, with withdrawals restricted to specific permitted uses under the law.

Trump Accounts are designed as long-term investment vehicles to help young people build assets early. Account assets are generally invested in a diversified stock index fund, allowing children to benefit from potential market growth over time. Withdrawals are generally limited until adulthood and subject to rules governing how the money can be used.

Notably, the program has also attracted support from some major employers and philanthropists.

One commitment that gained a lot of attention is a $6.25 billion pledge from Michael and Susan Dell to help fund accounts for millions of children. According to the Trump administration, several large employers also plan to contribute to the accounts as an employee benefit.

Supporters of the program say the accounts could help encourage early saving and broaden access to long-term investing for children, particularly by giving families a structured way to build assets over time.

During a July 6 Oval Office launch event, President Donald Trump touted, "Trump Accounts are absolutely incredible for children. They come into the world with no money and by a certain age end up rich."

Critics, however, have questioned whether the benefits will be widely accessible. They cite contribution limits, withdrawal restrictions, and concerns that higher-income families may be better positioned to take full advantage of the program than households with lower incomes.

Some also question whether other savings vehicles make more sense, as they see Trump Accounts functioning as traditional IRAs minus the up-front tax deduction.

On TikTok, personal finance guru Dave Ramsey said of Trump Accounts: "They're not as revolutionary as a Roth IRA. They're not on the level of a 529. This feels more like a political stunt than a wealth-building breakthrough."

More recently, as Kiplinger has reported, comments by Sen. Ted Cruz (R-Texas) suggesting the accounts could serve as a backdoor to privatizing Social Security have added to the debate.

IRS gift tax exclusion rules for Trump Accounts

Then, there are the practical tax-law questions surrounding how Trump Account contributions would be treated under federal gift tax rules.

Under federal law, individuals can give up to $19,000 per recipient in 2026 without triggering gift tax reporting requirements, provided the gift qualifies for the annual exclusion.

Amounts above that limit generally require filing IRS Form 709, even when no tax is owed due to the lifetime exemption.

So, a key question was whether contributions to a Trump Account would qualify for the annual exclusion. The issue attracted attention because gift-tax reporting requirements can apply even when no gift tax is ultimately due.

• Some tax professionals had raised concerns that the structure of the accounts could cause contributions to be treated as gifts of a future interest.
• Future-interest gifts don't qualify for the annual gift tax exclusion, which can trigger tax reporting requirements even for relatively small amounts.
• If that view had applied, contributors to a child's account could have been required to file a gift tax return.

The IRS guidance resolves that issue by establishing a safe harbor that treats qualifying contributions as present-interest gifts, allowing them to qualify for the annual gift tax exclusion.

As a result, contributions within the annual limit can generally be made without triggering a federal gift tax filing requirement, provided they meet the conditions in the guidance.

Note: The issue here is largely about tax reporting rather than tax liability. Most U.S. taxpayers don't pay federal gift tax because gifts above the annual exclusion generally count against the donor's lifetime gift and estate tax exemption. At $15 million, that exemption is high enough that relatively few households ever owe gift tax.

Trump Account eligibility: Bottom line

Trump Accounts are now in the active launch phase, including an app. That means families interested in participating can begin setting up accounts, depending on which banks and brokerage platforms are offering access.

Administration officials have said millions of accounts have already been registered and that 500,000 children have received their $1,000 deposits. Treasury and IRS officials have also recently outlined how contributions of publicly traded stock may be made to the accounts.

Still, before making contributions, interested families may want to compare and understand each provider's account-opening process and work with a trusted financial planner to consider the pros and cons of contributing to these or other savings accounts.

Related

• Gift Tax Exclusion for 2026: How Much Can You Give Tax-Free?
• How to Claim a $1,000 Trump Account for Your Kid
• The Estate Tax Exemption Amount for 2026
• What's in the 2025 Trump Tax Bill?

These days, a yield north of 4% on a safe place to park your cash is a pretty good deal. So Series I savings bonds, which are offering a 4.26% composite rate on newly issued bonds, are worth a look. And because their interest rate adjusts based on inflation, they're especially useful if you want to hedge against rising prices. In April, consumer prices rose at an annual rate of 3.8%, the highest level in nearly three years.

At TreasuryDirect.gov, you can purchase I bonds for a minimum of $25, with an annual limit of $10,000 per person. Backed by the full faith and credit of the U.S. government, I bonds offer an interest rate that has two components: A fixed rate that lasts the life of the bond and an inflation rate that resets every six months based on changes in the consumer price index. Together, they form the composite rate.

Each May 1 and November 1, the Treasury Department sets a new fixed rate and inflation rate that apply to bonds issued in the following six months. (The inflation rate also applies to older bonds when they reach their six-month adjustment date.) The 4.26% composite rate for I bonds purchased May through October of this year includes a 0.9% fixed rate. I bonds earn interest monthly, and interest is compounded (in other words, added to the principal) semiannually.

A 4.26% yield is better than the rate you can get on most other low-risk places to put your money, such as savings accounts and money market deposit accounts. But you can't cash out an I bond until you've held it for 12 months. And if you redeem it within five years, you forfeit the last three months of interest. So these bonds are best used for longer-term savings.

An I bond reaches maturity after 30 years, when it stops collecting interest. The interest earnings are exempt from state and local income tax, although you usually owe federal income tax. You can pay tax on the interest each year or defer it until you redeem your bonds. Although most people choose the latter, reporting the interest every year can be a smart choice if you'd rather avoid one large tax bill down the road.

What to do with older bonds

If you bought I bonds in 2022, when surging inflation resulted in a record-high composite rate of 9.62% on bonds purchased from May through October of that year, you may be thinking about how long to hold on to them. They have a 0% fixed rate, and their composite rate for the six-month earning period starting between May and October of this year is 3.34%.

If you don't need the cash right away, there's no rush to redeem the bonds, says David Enna, founder of Tipswatch.com, a website that tracks I bonds. Although you could cash them in now and use the money to buy new I bonds with a higher fixed rate, consider whether it's worth the early-redemption penalty of three months' interest, he says. And even after the five-year mark, when the penalty no longer applies, keeping the bonds until they mature isn't a bad idea. They'll continue to benefit from compounding interest.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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Raising financially responsible children means integrating financial education as early as possible.

From helping them save money in their piggy bank in the early years to budgeting larger purchases as they grow older, parents are integral to their children's financial success.

Still, saving for them continues to prove challenging. The cost to raise a child in the United States from birth to age 18 now averages more than $300,000 and is expected to increase.

As prices rise, it is more important to understand the savings options available to support your child's future.

In December 2025, a new form of savings account, 530A Accounts, more commonly known as Trump Accounts, was announced to help parents save for their children's future in a tax-advantaged way.

I'm a CFP® professional, and as more information has emerged about these accounts, my clients have asked questions about the specifics of this investment vehicle and how it fits within their current planning strategies. Here's what I am telling them.

What is a Trump Account?

It's important to understand that these new accounts aren't a replacement for other savings or retirement accounts, such as IRAs and 529 plans, but an additional strategy to complement your current financial plan.

Historically, helping a minor save for retirement has been accomplished in a Uniform Transfer to Minor Act (UTMA) account or a 529 college savings account. Each has benefits and drawbacks.

An UTMA account can help you save for a child's future, but the funds don't become available until the age of majority, which is determined by state law

A 529 is a great vehicle to save for college, but it's limited to that need — otherwise, taxes and penalties apply

While these accounts address the needs of children in their adolescence, there's been little discussion about starting early on their retirement savings. The introduction of the Trump Account addresses this gap but also comes with its own benefits and drawbacks.

What are the benefits and drawbacks of a Trump Account?

Let's start with the good news. Anyone can contribute to a Trump Account on behalf of a beneficiary under 18, including the beneficiary themselves. These contributions are made with after-tax dollars and grow tax-deferred until withdrawn.

Employers can also make tax-free contributions to a Trump Account, up to $2,500 per year.

Contributions are limited to $5,000 per year, per beneficiary and are indexed for inflation. The government might elect to issue a $1,000 grant to help kickstart the account.

Assets in a Trump Account are considered the beneficiary's funds and aren't available to creditors, and the Treasury Department has selected Bank of New York to hold these accounts with the help of broker-dealer Robinhood to develop the new Trump Account app.

There are, however, two distinct limitations to Trump Accounts:

Applicants must have a current U.S.-based address, so parents who live abroad aren't eligible to apply

The seed-money program is limited to children born from January 1, 2025, to December 31, 2028, who are U.S. citizens and have a Social Security number. Money in a Trump Account must be invested in a high-risk U.S. equity index, as opposed to a mix of equities and bonds or a lifecycle fund.

How are Trump Accounts used?

These accounts have strict parameters, chiefly that no withdrawals are permitted before the beneficiary reaches age 18.

Once the beneficiary reaches age 18, their Trump Account is converted to a traditional IRA account and is subject to the same withdrawal rules: Tax-free contributions, appreciation and earnings are taxed as ordinary income.

Withdrawals before age 59½ are subject to a 10% penalty unless one of the following exceptions applies:

• First-time home purchase
• Birth or adoption expenses
• Qualified higher education expense
• Death
• Disability
• Terminal illness
• Health insurance expenses if unemployed
• Some medical expenses

These accounts are also subject to future tax law changes; it might be possible to convert the traditional IRA to a Roth IRA at little to no tax at age 18. If the beneficiary dies during the growth period before turning 18, the account terminates. The income is taxable to "the recipient or to the deceased beneficiary's estate."

Wealthy families might consider these accounts an "extra bucket" after their core planning. Given contribution caps and restrictions, the accounts are best positioned as a supplemental planning tool alongside 529 plans, trusts and retirement vehicles.

Additional questions and answers

How do you get started with a Trump Account? Getting started appears straightforward. You can submit an application at www.trumpaccounts.gov and complete IRS Form 4547. You'll be contacted when it's time to activate your account after the program goes live.

Will Trump Accounts supercharge your children's retirement planning? No. They're simply another long-term savings vehicle that you can set and forget that provides more for your child when they're ready.

Will Trump Accounts work for all families? No, the small pilot program and geographic considerations will initially exclude a large portion of the population, although the overall approach could serve as a smart model that kickstarts retirement planning from birth and shifts the investing landscape for decades to come.

Only time will tell.

Related Content

• Trump Accounts Launch July 4. How They Compare With 529 College Savings Plans
• Trump Account App Is Live: How to Claim Your Kid’s $1,000 in 3 Easy Steps
• GOP Trump Account for Savings: Treasury Outlines July 4 Launch
• I'm a Financial Planner: Trump Accounts Are a No-Brainer if You're Eligible (How to Apply)
• Where to Save Your Kids' Cash

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Do you have a plan for how you'll spend your money in retirement? If not, join the club. Many retirees wing it when it comes to withdrawing their hard-earned savings.

But that's a big mistake, says Jean Chatzky, best-selling author of The Forever Paycheck and founder of HerMoney. It's the biggest mistake retirees can make.

"The lack of a concrete plan actually prevents them from living their best retirement," Chatzky tells Kiplinger. "They are not living as well as they could." If you overspend without a plan, you could face a retirement shortfall. If you underspend, you won't get to fulfill your retirement goals.

Reluctance to spend among retirees

Underspending is a common problem among retirees, despite large nest eggs built on a decade-long bull market. By the end of 2024, Fidelity Investments reported that baby boomers made up 41% of all 401(k) millionaires, while Generation X (ages 45 to 60) accounted for 57%.

Yet, despite healthy balances, many are wary of spending. A recent Corebridge Financial survey revealed that less than one-third of retirees feel comfortable spending their savings, with most noting that the prospect causes stress or anxiety. While Chatzky emphasizes that a detailed strategy can alleviate many of those feelings, just 14% of retirees report having a plan to manage their required minimum distributions.

"There are a number of decumulation strategies, but I'm a believer that covering your fixed costs with some sort of paycheck, some sort of guaranteed income, is likely to enable people to live better with less stress," Chatzky says.

That doesn't mean all your money should be in a guaranteed investment product such as an annuity, bonds or Treasuries, but locking some of it in a "forever paycheck is really a smart move for most people," she says.

Preretirees need a plan, too

If you're a pre-retiree, Chatzky says the biggest mistake you can make in the run-up to retirement is not having a plan.

• Do you want to downsize or age in place?
• Will you earn money or are you completely exiting the workforce?
• What about your spouse? Is he or she retiring with you?
• How do you plan to spend your free time?

You need answers to all that and more ahead of time if you want a successful retirement, says Chatzky.

"I'm always baffled by the number of couples who have very, very different retirement visions from one another," says Chatzky. "They get to the point and realize they are not on the same page at all."

Just as with buying a house or having a baby, you can't plan out your withdrawals until you know what your lifestyle looks like and how much it will cost.

Help is out there

When it comes to planning, Chatzky encourages everyone to consider hiring a financial adviser. A financial planner can map out a plan for how to spend your money in retirement or determine how much you need to save.

Chatzky said that while some people think hiring a financial planner means paying fees forever, or think they don't have enough money to need one, both notions are dated and wrong.

You can hire a financial adviser to create a plan you execute yourself, you can hire a planner to review a plan you created, or have someone do it all for you, says Chatzky.

"The whole financial planning field has become democratized in a way that I truly think there are planning services available to fit everyone," she says.

Editor's note: This article is part of an ongoing series in which we ask influential personal finance figures to share their opinion on the biggest retirement mistake you can make. Other articles feature Suze Orman, Dave Ramsey, Grant Cardone and Ramit Sethi.

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Is your high-yield savings account costing you money? With inflation at 4.20%, your money is losing value unless it's in an account that earns at least a rate that keeps pace with inflation.

The bad news is that many savings accounts, including high-yield savings accounts and CDs, are currently not outpacing inflation, and since the Federal Reserve is not raising interest rates, that's not likely to change very quickly.

There is good news. First, if there's a concrete end to the war in Iran, inflation could be at its peak, per David Payne of The Kiplinger Letter, meaning that you could regain purchasing power as inflation slows. Second, it takes some digging, but there are some savings accounts that earn rates to keep you on pace or ahead of inflation.

I'll start by showing you why not shopping around for better high-yield savings account rates erodes your purchasing power, and we'll find the savings account outpacing inflation. Finally, I'll outline three steps to get you back on track towards achieving your savings goals.

The savings strategy costing you money

I understand the appeal of keeping your cash in the same place. However, most savings accounts (including high-yield) or CDs don't earn rates outpacing inflation currently. It means if you're still using these accounts, you're losing purchasing power.

This is why it's important to pivot as economic circumstances change.

How much does inflation eat into your savings? If you have a high-yield savings account with $50,000 in it earning 3.50% APY, while inflation is at 4.20%, you'd effectively lose $350 a year in purchasing power by keeping it in that account.

That's why even if your high-yield savings account was doing well before, you want to re-evaluate it to find better options.

The savings solution that keeps you on pace with inflation

I review savings accounts weekly and haven't found many that keep pace with current inflation, aside from this account from Newtek Bank:

What I like about it is that it has retained higher rates even amid Fed rate cuts and inflation. It's also easy to set up an account; you don't have monthly fees, and if inflation cools and eventually lowers, your cash will have more purchasing power.

If you're looking for any savings accounts outpacing inflation, I found one more option for you.

Are there any savings accounts outpacing inflation?

While the high-yield savings account from Newtek Bank will be the best fit for cash access, CDs also offer exceptional rates. The only caveat is that you must keep your money in one until the term expires, as CDs have early-termination fees.

With inflation at 4.20%, the only CDs currently outpacing inflation are jumbo options. The best jumbo CD rates are 4.35%, but you'll need at least $50,000 to $100,000 on deposit to open one with many banks.

The good news is that maturity windows are only a year at most, allowing you to earn thousands effortlessly, while keeping ahead of rising prices.

Use this Bankrate tool to compare options fast:

The one thing to consider is that CDs have steep early-termination fees. For jumbo CDs, this could be months of earned interest, costing you hundreds to potentially thousands of dollars. Only do this approach if you're confident you won't need the money in the interim.

Meanwhile, if you're struggling to hit your savings goals, let's outline some strategies to help you get back on course.

What to try: 3 steps to maximize your savings yield

1. Audit your current APY: If you have a high-yield savings account earning less than 4.20%, you're losing ground with rising inflation. Instead, look at Newtek Bank or a jumbo CD to increase your purchasing power.
2. Designate a purpose: By setting specific savings goals, you give your cash purpose and direction.
3. Know when to shift: Once you reach your savings goals, you'll want to devote more money to paying off high-interest debt or invest it, where you could earn returns much higher than inflation.

Ultimately, where you store your cash now matters more than ever due to rising inflation. Choosing a flexible option, such as a high-yield savings account with Newtek Bank or a jumbo CD if you don't need access to your money right away, allows your cash to retain more of its purchasing power.

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• Do You Have a CD Maturing Soon? Here's What to Do Next
• Best CD Rates — A Risk-Free Way to Save
• Where to Store Your Cash in 2026

At its July meeting, the Federal Reserve voted to pause interest rates in the 3.50% to 3.75% range yet again. But the split decision saw three voting members vote to raise rates. This has many experts anticipating a rate hike as soon as September.

With inflation hovering at 3.5% and many savings accounts barely keeping pace, where is the best place to stash the cash you don't need right now?

If you don't want it to lose purchasing power amid rising inflation but you also don't want to risk exposing it to the market by investing it, a certificate of deposit (CD) account is one of your best options.

But how do you choose the right term length? That really comes down to what the Federal Reserve's next move is. While a 5-year CD was your best bet in the past, with Fed rates still above average while inflation was ticking downward, the uncertainty in today's economy makes those longer-term CDs less attractive.

With inflation expected to remain elevated and another Fed rate hike still possible later this year, a short-term CD may be your best option. It lets you lock in today's rates while keeping enough flexibility to move your money if interest rates or market conditions change.

Why a short-term CD is your best after the fed meeting

Like high-yield savings accounts, CD rates generally move in the same direction as Federal Reserve policy. The difference is that a CD locks in a fixed rate for the entire term, while savings account rates can rise or fall at any time.

With many short and long-term CDs offering around 4% right now, locking in those above-average rates for as long as possible was a great idea when inflation was trending downward. But now that inflation is back above 4% and only a few savings accounts are beating it, a short-term CD, with a term of, say, six or so months, might be a better bet.

This allows you to lock in higher rates for a few months while you wait to see what happens with inflation and what kind of signals the Federal Reserve puts out about where interest rates might land by the end of the year.

If the Federal Reserve raises rates in response to stubbornly high inflation, you'll have the opportunity to lock in those new higher rates after the term is up. If inflation, instead, starts falling again, you can move your cash after those few months to a longer-term CD to lock in these rates for longer.

With that in mind, use the tool below to find the top CD rates available today:

Economic signs to watch to anticipate the future of interest rates

After stashing your cash in a short term CD, you can keep an eye on the economy in the next few months while you wait for it to mature. That way, when it does mature, you'll have a good idea of where to move your cash next to maximize your yields.

• Watch for clues as to how Kevin Warsh will change the Fed. Warsh has historically been a proponent of keeping rates higher rather than risking inflation. But some analysts speculate that he might be more likely to give in to pressure from President Donald Trump to cut rates. Keep tabs on what he says in upcoming meetings to get a sense of which way he might lean in the future.
• Keep up with the monthly CPI reports. The consumer price index released every month by the Bureau of Labor Statistics not only gives you a broad picture of how your own costs are changing, but it's an important measure of inflation tracked by the Federal Reserve. If inflation keeps going up, the Fed is likely to either keep rates paused or hike them further. If inflation slows, rate cuts might be in the future.
• Check the latest jobs reports. In addition to inflation, the Federal Reserve also closely watches employment data, including unemployment rates and wage levels, when setting its monetary policy.
• Track the 10-year Treasury yield. Especially for longer-term savings accounts, such as your CD, rates can be influenced by yields on multiyear Treasury bonds. This is also an important economic indicator to watch if you might be buying a house soon, as the 10-year Treasury yield also influences mortgage rates.

Even if you don't want to track economic indicators that closely for the rest of the year, you can stash your cash in a short term CD now and set a reminder to check in on what's going on in the market in the weeks before it matures.

From there, you can decide whether to move your cash into another short-term CD or lock in rates for longer by opting for a multiyear CD.

Related content

• Do You Have a CD Maturing Soon? Here's What to Do Next
• What the Fed's Rate Pause Really Means for Your Money
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What is the best way to save money for children?

I get this question quite a bit from new and existing clients alike. It usually gets brought up by parents, but sometimes it comes from aunts, uncles, grandparents and other guardians.

The answer, as it is to so many financial questions, is: It depends on the financial goals and wishes of the saver.

While it can be hard to determine what a newborn will be interested in at age 18, opening pathways with a nest egg is a good start. Some of the most common account types to save for children:

• 529 plans
• Roth IRAs
• Uniform Gifts to Minors Act (UGMA) accounts
• Coverdell Education Savings Accounts (ESAs)

Each have a different set of benefits, depending on your priorities.

529 plans

529s are tax-advantaged savings vehicles for guardians to save for higher education. Depending on where you live, your state might offer a specific tax benefit for savings efforts.

Some states offer a tax benefit for both in-state 529 plans and plans from other states so you'll need to confirm what regulations apply to you.

Similarly, some states also recapture the benefit if the money is used for noneducation purposes. As you're considering what choice to make, one important piece of the puzzle is confirming your state tax benefits with 529 plans.

With rising higher education costs, 529 plans are becoming more impactful. The passage of the Secure Act 2.0 expanded options for those funds by allowing the rollover of funds to a Roth IRA and a change in beneficiary.

Roth IRA rollover

After an account has been open for 15 years, money within a 529 can be repurposed as Roth contributions, as long as the funds are at least five years old.

For example, if you have $10,000 in a 529 and contributed another $5,000 during year 15, that deposit must remain in the 529 account for five years before it can be moved to a Roth IRA. The initial $10,000 can be transferred during year 15.

While a minor can't sign Roth IRA account paperwork, adults can open a custodial or guardian Roth on their behalf.

I also often hear clients say, "I want to open a Roth IRA for my child." If the minor has a W-2 for wages earned, you can.

I once worked with a grandmother who opened one for a granddaughter who had a minimum wage summer job as a pool lifeguard. Once a year, the two would come in to contribute the amount in the granddaughter's W-2 to a Roth, typically a few thousand dollars.

While the granddaughter spent the money she earned on other things, her grandmother would gift her an equal amount in her Roth contribution. At 18, the grandchild was able to re-register the account in her own name.

Nonqualified distributions

While a 529 account is ideally used for education expenses, nonqualified distributions might also be an option for noneducational uses for 529 funds.

Even if used for other purposes, principal contributions can be withdrawn without tax or penalty, although earnings are charged a 10% penalty to the IRS.

If the account is started for a newborn and the nonqualified withdrawal is completed on or by their 18th birthday, the owner can still enjoy 18 years of state tax benefits and tax-deferred growth.

I sometimes get savers who put their personal experiences first when making decisions for their children's savings. I've heard many times, "I did not have a 529 to pay for higher education, and I made it work."

Other times, the saver might be concerned that a 529 could influence a child's decision to pursue higher education.

In those cases, Uniform Transfers to Minors (UTMA) and Uniform Gifts to Minors Act (UGMA) custodial accounts might be better alternatives.

UTMA and UGMA accounts

As an alternative, these types of accounts let you save for a child without the expectation that the funds will be used for education.

Instead, deposits are an irrevocable gift to the child, and the adult custodian manages investments until the child reaches the age of maturity.

Coverdell Education Savings Account (ESA)

One of the final ways to save for a child's education is with a Coverdell ESA. During my 15-plus years in the industry, I've seen few of these.

In my opinion, 529 accounts are often preferable, given their flexibility. ESAs have low contribution limits, and the assets must be used by age 30.

High-income earners are also ineligible for these accounts and others can only contribute to the account until the child's 18th birthday.

So many choices — what should you do?

I have children and reviewed the same options for my family. For our circumstances, I found the best options to be an UTMA and 529.

The benefits of the 529 shine the most in my opinion, and I have automatic monthly contributions to a 529 for each of my children. As they become comfortable making their own financial decisions, I'm onboard with Roth contributions for unused 529 assets or even cashing out the accounts to give the cash to my children.

I can even transfer an unused 529 for one child to another, without tax or penalty while replacing the funds with personal savings.

For the UTMA account, I deposit any gifts of cash my children receive for holidays or birthdays. To encourage good financial values, I let them decide how much to save.

For those trying to pick the best option for their family, whichever path you choose, you're working toward a goal. We don't know what the future holds, but rest assured you helped your loved one in some way with your savings efforts.

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Weeks away from the official launch of "Trump Accounts," the child savings vehicles from the 2025 tax bill, a targeted spinoff is set to roll out.

Dubbed "Fostering the Future Accounts," this new initiative is designed to help children in foster care save for future housing, educational, and career development costs as they transition to adulthood.

First lady Melania Trump and U.S. Department of the Treasury Secretary Scott Bessent announced in a press release that these new accounts will open on July 4, 2026.

“Fostering the Future Accounts give foster children the same chance for asset ownership and long-term wealth building as every other American child," Mrs. Trump remarked. "By investing in our foster youth now, we help strengthen America’s workforce, communities, and economic future."

But because these accounts will be opened and managed by state infrastructure, states must opt in. Not everyone is on board. Read on for who qualifies and what's holding back the remaining 27 states.

New: Low-Tax States For Middle-Class Families Ranked by Childcare Affordability

Fostering the Future Accounts for kids

The Trump "Fostering the Future Accounts" are an offshoot of standard Trump Accounts structured to help children in foster care save for long-term financial goals, like a down payment on a home or higher education expenses.

To qualify, a child must be:

• Under age 18
• A U.S. citizen with a Social Security number

These accounts might be opened by a state, territorial, or tribal child welfare agency. They can also be opened by designated foster parents or other legal guardians in the foster care system.

Which states are participating?

Because Fostering the Future Accounts are managed at the state level, access depends on local legislative approval. So far, governors in the following 23 states have pledged to offer the program, according to White House officials:

Participating state child welfare agencies must submit IRS Form 4547 (Trump Account Election) to formally open an account for each eligible child in their custody.

Fostering the Future Accounts vs standard Trump Accounts

Although Fostering the Future accounts function the same as a standard Trump Account — investing in stock market index funds to grow tax-deferred savings — there are some nuances in how each is opened and funded.

For instance, when a parent or guardian opens a standard Trump Account, they can claim a $1,000 federal seed deposit directly into the newborn's account, provided their child is born from 2025 to 2028.

However, "a child welfare agency cannot elect to receive the $1,000 pilot program contribution to the child's [Fostering the Future] Account," as the IRS reported in a recent update. Instead, only a foster parent or other qualifying individual who anticipates caring for the child might claim this federal seed money for the child's account.

Here's a table highlighting several other key differences between the two types of accounts:

The Fostering the Future Accounts also have unique funding methods that the federal government doesn't offer for standard Trump Accounts.

For example, state officials can redirect existing state resources — such as unused Temporary Assistance for Needy Families (TANF) block grants — into a foster child's savings, according to the Administration for Children and Families (ACF).

Why isn't my state on the list?

Notably, all 23 states opting into Fostering the Future Accounts are GOP-led, reflecting the partisan divide surrounding Trump Accounts, which were a key component of the 2025 Trump tax bill.

But beyond partisan lines, several other reasons exist for why states might heavily debate signing on:

• Strained budgets. State child welfare departments often depend on federal funding streams such as TANF and the Social Services Block Grant (SSBG) to operate. Because most states have already finalized their budgets for the upcoming fiscal year, adding new, unplanned programs midcycle might be too financially constrained.
• Administrative hurdles. Fostering the Future Account documentation, including individual investment portfolios and private donations for every child, must be monitored. As such, participating state agencies are required to establish new protocols to continuously update this information, which might prove difficult given that children frequently shift between foster homes.
• Legal challenges. Legally, a state, territorial or tribal child welfare agency might open a Fostering the Future account, but the timeline of who holds account management authority can be constantly in flux. If a child is in temporary emergency care, for instance, then switches to kinship care or transitions between different county jurisdictions, it might be unclear who is legally authorized to update the account. (Note: the Treasury and ACF released joint guidance related to this issue.)

Ultimately, the Trump administration has set a target for all 50 states to sign on to Fostering the Future Accounts by December 2027.

However, some child welfare advocates worry that a prolonged state-by-state rollout will deepen economic disparities for children aging out of foster care — especially for children who move across state lines due to interstate adoptions or structural changes in their care.

Ruth Anne White, executive director of the National Center for Housing and Child Welfare, told independent news outlet, The Imprint. "But it's right there in the Child Welfare Policy Manual [released guidance] — as clear as day."

According to data from the National Council for Adoption, there are roughly 330,000 children in the U.S. foster care system. Statistics from the National Foster Youth Institute show that one in five foster youth face homelessness after aging out of the system, and only half secure gainful employment by age 24.

Supporters of the new initiative hope these accounts will disrupt those outcomes.

Yet while supporters have framed Fostering the Future Accounts as a solution to the financial hardships facing youth aging out of care, states will need to overcome complex questions surrounding budget allocations, administrative hurdles and bipartisan support.

Until then, foster parents and child welfare agencies will find that state lines dictate whether children in their care are eligible for these accounts.

Read More

• How to Claim Your Kid’s Trump Account in 3 Steps
• Adoption Tax Credit: What You Need to Know for 2026
• Child Tax Credit 2026: How Much Is It and What's Changed?

Summer often brings higher discretionary spending. A weekend trip to the beach, extra outings with friends or that must-have ice cream machine can quickly eat into your budget. But summer can also be an ideal time to build savings without making major lifestyle changes.

Because the holiday season is still months away, even small weekly contributions can add up over time. Whether you're building a holiday fund, boosting your emergency savings or paying down debt, setting aside a little money each week can make a difference.

The goal of a summer savings challenge isn't to eliminate fun. It's about being intentional with a portion of your spending while still enjoying the season. Building your savings doesn't have to be complicated. Follow these five steps to make the most of the summer months and put yourself in a stronger financial position by fall.

Step 1: Choose a savings goal

Before you start saving, decide what success looks like. Giving every dollar a job can help you stay committed when summer spending temptations arise. Here are several ways you could use the money you save:

• Holiday spending fund: Use the summer to save up for your holiday spending. Knowing you have funds available can make it easier to buy holiday gifts or plan special celebrations.
• Emergency savings: Experts recommend having at least three months of living expenses in savings, though given the uncertain economy, having six months of expenses saved up may give you greater peace of mind.
• Credit card debt payoff: Consider using your summer savings to pay off some or all of your credit card debt. Once you’ve paid off that debt, you can continue to save the money that was going to your monthly credit card payments.
• Back-to-school expenses: If you have kids who will be heading to school or college in the fall, saving throughout the summer can make it easier to stock up on essential supplies.
• Travel fund: Consider adding your savings to your travel fund. You might use that money for family vacations, or save up for that once-in-a-lifetime trip that you’ve always wanted to take.

Once you've chosen a savings goal, make sure your money is working as hard as you are. Parking your funds in a high-yield savings account can help your balance grow faster.

Use the tool below, powered by Bankrate, to compare some of today's top savings account options.

Step 2: Pause one recurring expense

Once you've identified your savings goal, look for an easy way to free up money in your budget.

Go through your bank account or credit card statements to see where your money is going each month. Chances are you'll find at least one expense you can live without for a few months. Redirecting that money to savings can help you make steady progress toward your goal without dramatically changing your lifestyle.

You might be able to pause one of these common expenses:

• Streaming service
• Weekly takeout habit
• Convenience-store purchases
• Subscription box
• Daily coffee shop visits
• Food delivery orders
• Unused gym memberships or coaching subscriptions
• Impulse online shopping

Choose one realistic cutback that you can make temporarily while you focus on saving money.

Step 3: Redirect rewards and unexpected cash

Cutting expenses isn't the only way to save more money this summer. You can also accelerate your progress by redirecting unexpected cash and everyday perks into your savings account. Because this money isn't part of your regular budget, you may be less likely to miss it. Consider whether you'll receive any of these sources of extra cash this summer:

• Cashback rewards: It's easy to treat cash-back rewards like free spending money. If you're carrying credit card debt, consider applying those rewards directly to your balance to reduce interest charges. Otherwise, transfer the rewards to your savings account and put them toward your summer savings goal.
• Credit card statement credits: Statement credits can lower your monthly bill and free up cash in your budget. Rather than spending those savings elsewhere, transfer the equivalent amount into a high-yield savings account. If a credit creates a negative balance, your card issuer may allow you to request a refund check.
• Cell phone perks and discounts: Many wireless plans include free streaming subscriptions, discounted services or other perks. If you're no longer paying for those benefits out of pocket, move the money you would have spent into savings instead.
• Rebates and loyalty rewards: Whether it's a manufacturer rebate, store reward or loyalty-program payout, treat these bonuses as found money and deposit them directly into your savings account.
• Tax refunds or side-hustle income: Consider earmarking all or part of a tax refund, freelance income or earnings from a side gig for your savings goal. Since this money isn't part of your regular paycheck, it can be easier to save without affecting your day-to-day budget.

Direct those perks and windfalls into the account you're using for the summer savings challenge. Because the money never sits in your checking account, you'll be less tempted to spend it. Over time, those extra dollars can add up faster than you might expect, and watching your balance grow can help keep you motivated.

Step 4: Automate your savings through Labor Day

Set a savings goal and decide how much you can realistically set aside from each paycheck throughout the summer. Then, schedule automatic transfers from your checking account to the account you're using for the challenge. Setting those transfers to continue through Labor Day can help keep your savings on track.

Consider giving the account a name that reflects your goal, such as "Holiday Fund," "Emergency Fund" or "Vacation Fund." Seeing that name each time you check your balance can serve as a reminder of what you're working toward and help keep you motivated.

Automating your savings removes the need to make a decision every payday. Instead of relying on willpower, you'll build saving into your routine, making it easier to stay consistent and reach your goal.

*Based on saving consistently from mid-summer through Thanksgiving.

Step 5: Track your progress and stay motivated

Staying motivated is often easier when you can see your progress. Consider using a budgeting app such as Monarch, Quicken Simplifi or YNAB to track your savings goal throughout the summer. If you prefer a low-tech approach, create a simple chart or tracker on paper and update it each week.

If you're saving toward a shared goal, such as a vacation, holiday spending fund or emergency fund, check in regularly with your spouse or partner about your progress. Seeing your balance grow can reinforce positive habits and make it easier to stay committed to the challenge.

Remember, the goal isn't to eliminate summer fun. It's to be more intentional with your spending while consistently setting money aside for a larger financial goal. By Labor Day, those small weekly contributions could leave you with hundreds — or even thousands — of extra dollars heading into the fall.

A summer savings challenge doesn't require a complete budget overhaul. Instead, focus on consistently setting aside even a small amount of money each week. Over time, those contributions can help reduce financial stress and put you in a stronger position heading into the fall and holiday season.

Related Content

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The graduation caps have been tossed, summer heat has arrived, and graduate celebrations are winding down. But as reality sets in, you might notice a surprising line on your financial dashboard: unspent money in your child’s or grandchild’s 529 plan college savings account.

Roughly 10% of families may end up with surplus 529 funds, according to data from Consumer Reports, often thanks to unexpected scholarships or grants, or by choosing a more affordable school. Fortunately, thanks to the SECURE 2.0 Act, you may be allowed to roll those leftover education funds directly into a Roth IRA without paying federal income tax or a penalty.

Yet it isn't always as simple as moving money from point A to point B. The IRS has strict, fine-print rules regarding timelines, lifetime limits, and account history.

Take our 6-question quiz to find out if you can seamlessly pivot your beneficiary's college savings into a retirement head start — or whether a different tax strategy might make more sense for your family.

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• If you're hiring your kids, these are the tax benefits and IRS rules to follow.

The Bureau of Labor Statistics released its June CPI report, showing inflation dropped 0.4% for the month, the largest drop since April 2020. Year-over-year, inflation is up 3.50%.

Temporary lower fuel costs remain the primary catalyst for these trends. Core CPI remained unchanged, though the ongoing conflict in Iran threatens price stability.

The good news for savers is that with the slight dip, I found more savings accounts and CDs outpacing inflation. I'll show you where to earn the most based on your savings goals, what the inflation number means for Federal Reserve policy and other steps you should consider.

These are the savings accounts outpacing inflation

If you are looking to build an emergency fund or have a short-term savings goal where you need cash access, I would consider a high-yield savings account, but look carefully at the rates, as many don't outpace current inflation.

Newtek Bank offers a savings account earning 4.20% APY with no monthly fees. This will keep you ahead of inflation in the interim.

The benefit of this account is that you build your savings without tying your money up as you would with a CD. Plus, if inflation begins to rise again, the Federal Reserve might issue a rate hike, which would mean the rate on a high-yield savings account would also adjust upward.

Will this inflation news change Fed policy?

Not in the interim, but momentum toward rate hikes could build again if gas prices rise. The Fed meets on July 28-29, with the CME Group FedWatch projecting an 87% probability they'll leave rates alone this time around.

That said, Cleveland Federal Reserve President Beth Hammack believes changes must come if inflation rises again. In a speech to the City Club of Cleveland on June 2, she said that monetary policy alone might not be enough to bring inflation down to the Fed's 2% target.

She added that if higher inflation becomes embedded in the economy, bolder moves, such as rate hikes, might be needed to help the Fed achieve its inflation target.

And this might be the trend we see play out. "Full normalization of energy costs could take well into 2027 because of extensive damage to energy infrastructure in the Middle East," writes David Payne, staff economist and reporter for The Kiplinger Letter, in the Kiplinger inflation outlook.

"Eventually, food prices will start rising, as one-third of the world’s fertilizer supply is produced in the Persian Gulf region." So, while the temporary drop in overall inflation is great, it might not last.

Are CDs a smart move right now?

Yes, they can be. I like short-term CDs right now because they can help you earn a rate higher than inflation. Plus, you can pivot to other investments if gas prices rise again.

It might also force the Fed's hand to raise rates. And this puts you in an excellent position to capitalize on them when your CD matures.

However, a long-term CD can work, too, if you're looking for a less risky venture to allocate some of your cash as you approach retirement. CDs offer guaranteed returns that won't change rates once you open one.

Here are some of the best CD rates I found:

What should you do amid rising inflation?

First, make sure you have an emergency savings fund with at least six months of expenses in a high-yield savings account. I suggest using Newtek Bank in the interim since it outpaces inflation.

Once you reach your savings goal, I recommend investing more of your money in the stock market, where returns might protect your cash from inflationary pressures. Kiplinger Personal Finance Magazine recently released our annual feature on where to find top yields for the rest of 2026, and you can also take a look at our picks for the best Vanguard ETFs and highest-yielding dividend stocks in the S&P 500, for more liquidity.

And if you need help on where to invest your money, use this Bankrate tool to find a reputable adviser to assist you, as they can create a plan based on your finances, goals and risk profile:

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• June CPI: Cooling Inflation Puts Rate Hikes on Hold for Now
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Question: Some of my friends have been laid off, prompting my husband and me to take saving money more seriously. How much should we save in the off chance one or both of us lose our jobs?

Answer: Preparing for worst-case scenarios is a smart move as part of financial planning. The more you're able to save, the less you'll have to incur debt to pay for living expenses if you or your husband face a job loss or another financial hardship arises.

So, saving any money is a good start. The key is to determine how much you really need in an emergency fund. I'll show you how to determine this savings goal as well as strategies to reach it quickly.

How much do I really need in an emergency fund?

It's going to depend on several factors, such as:

• How much do you need for essential expenses?
• Do both spouses work full-time?
• Are you self-employed?
• Does one spouse make significantly more than the other?
• The job market/forecast/location of the occupation you're currently in

To begin, review the last six months of bank and credit card statements to calculate your average monthly essential expenses. Using several months of data can help smooth out seasonal spikes in spending and provide a more realistic estimate of what you'll need if your income is disrupted.

For items like streaming, dining out and entertainment, I would only factor in minimal amounts since you'll want to maximize every cent you earn to account for a job loss.

Once you've calculated your average monthly essential expenses, I generally recommend saving enough to cover at least six months of expenses. If both spouses work full-time and earn similar incomes, three months may be sufficient.

Meanwhile, if you're self-employed or in a highly specialized field, aim for nine months to a year of savings. The goal here is to create enough of a cushion where your changed circumstances don't result in you incurring debt.

With this target in mind, I'll show you some strategies that will help you get there quickly.

Conquer your savings goal quickly. Here's how

The first is where you choose to store your cash. I like online banks because they offer higher returns with minimal fees. The best high-yield savings accounts can earn you up to 4.20% APY, keeping you ahead of rising inflation while helping you reach your savings goals quicker.

I also like them because it's easy to add money, and you can keep that money separate from your checking account. This can prevent impulse purchases while also giving you easy access to keep building your savings.

Use this tool, powered by Bankrate, to find and compare options quickly:

How much can you earn with a high-yield savings account? Using one of the top savings account offers we've found, Newtek Bank, a saver who starts with $5,000 and contributes $250 each month could grow their balance to about $8,273 after one year at 4.20% APY. That's roughly $273 in interest earnings, in addition to the $8,000 deposited over the course of the year.

Now, to reach these goals quickly, you'll first want to take stock of your finances. I like budgeting apps because they let me view multiple bank accounts in one hub and identify spending patterns I can adjust. Doing this first helps you maximize savings.

Some popular options include You Need A Budget (YNAB), which focuses on assigning every dollar a job, Monarch Money, which offers customizable budgeting and net-worth tracking tools, and Quicken Simplifi, which helps users monitor spending, savings and financial goals in one place. The best app is the one you'll use consistently, so consider testing a few options to see which fits your budgeting style.

Next, set up automatic transfers. This serves several purposes: First, you'll have steady contributions going into your account, so your balance builds. This gives you momentum and can incentivize you to save more if you receive tax refunds, work bonuses, or other unexpected income. Second, it takes one less thing off your plate, and you treat the transfer as a payment in your budget.

Can I save too much?

Yes, you can save too much. While it's important to build a healthy savings safety net in case the unexpected happens, once you reach your goal, you'll want to tackle other things in your financial checklist.

If you're behind on retirement, redirect the funds normally set aside for savings into your investments. Keep in mind that, even amid market volatility, investments have historically delivered higher long-term returns than savings accounts, and the longer you stay invested, the more you can benefit from compounding.

Alternatively, if you're working toward other savings goals, such as buying a house in the next few years, use the same strategies. Open another high-yield savings account separate from your fully funded emergency account, and build your savings this way.

Ultimately, preparing for worst-case scenarios can give you peace of mind if they happen. You'll also develop sound savings habits that you can apply to other areas of your financial life. Not only can this help you reach your goals, but it also saves you money because you won't have to rely on credit cards to cover essentials until you're back on your feet.

If you'd like personalized guidance, use the tool below, powered by Bankrate, to connect with a financial professional who can help you achieve your goals:

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When interest rates fall, as they did toward the end of 2025, borrowers across the country breathe a sigh of relief.

Lower interest rates mean loans, mortgages and credit cards are less expensive and help make monthly payments easier to manage.

But while borrowers continue to benefit from lower rates, savers are facing a much different reality: Lower returns on the wealth they've built.

Why savers feel discouraged

Savers enjoyed several years of elevated interest rates following the pandemic and grew accustomed to earning more on their cash.

However, they're now feeling the effects of lower rates. A recent WalletHub survey found 56% of Americans are unhappy with the interest rates on their bank accounts, while two in five say lower rates make them feel less motivated to save.

When rates drop, the impact is felt almost immediately across various traditional savings vehicles. Returns on high-yield savings accounts, money market accounts and CDs tend to move lower, reducing how much interest savers can earn.

In many cases, rates fall below the rate of inflation, which can shrink the value of savings over time.

Once returns decline, many savers start to question whether continuing to set money aside is worth the discipline and effort. After growing accustomed to higher interest rates, lower returns feel discouraging and less rewarding.

Savers may also face reinvestment risk. This means money that once earned higher interest must now be reinvested at a lower rate, making it harder to save consistently over time.

How to stay on track

While feeling discouraged is understandable, pulling back on saving entirely can create several long-term challenges. A lack of consistent contributions can make it more difficult to build enough savings for retirement, the purchase of a home or emergencies.

When interest rates fall, however, saving shouldn't stop. It may simply require a more intentional approach. Continuing to save a fixed portion of your income will help you maintain progress, regardless of how rates change.

Instead of relying solely on interest rates, savers may need to focus more on structure and consistency.

Some may consider using a tiered approach, such as a CD ladder, to help balance flexibility and returns over time.

Others may choose to diversify beyond traditional savings accounts, or compare high-yield options to find more competitive rates.

Interest rates will continue to move, which is why a strong savings strategy shouldn't depend on short-term rate movements.

By remaining consistent and adjusting where needed, savers have a much better chance of staying on track.

Related Content

• What the Fed's Rate Pause Really Means for Your Money
• What Is the Federal Funds Rate?
• Are You Making These 3 Savings Mistakes?
• How to Make Changing Interest Rates Work for Your Retirement
• How to Ride the Waves of Interest Rates and Inflation

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Data show that roughly 70 million workers participate in an employer-sponsored 401(k) plan as a key retirement savings vehicle, and 401(k) matches offered by many employers help boost those savings each year.

A Vanguard How America Saves report estimates the average employer match in the United States at about 4.6% of pay, in addition to employees' own contributions.

For someone earning $75,000 a year, that amounts to roughly $3,450 in additional tax-advantaged retirement savings annually. Some workers consider this effectively "free money" on top of their regular pay.

But…some employers have begun pausing or reducing matching contributions as they review benefit costs and overall spending.

For example, $2 billion customer experience company TTEC reportedly told employees it would suspend its discretionary 401(k) match through the end of 2026. Sherwin-Williams previously paused its match during a cost-cutting period and has since resumed it. In recent years, IBM has moved away from a traditional matching structure to a Retirement Benefit Account (RBA) defined-benefit plan, while still reportedly allowing employees to contribute to their 401(k)s.

The details surrounding these and other similar situations vary, but the outcome for workers is generally the same. There's less money going into their retirement accounts from their employers.

That leads to a key question for those affected: What, if anything, changes for your taxes and savings when the 401(k) match goes away?

Why some companies are suspending 401(k) matches

Employer 401(k) matches have long been a core part of workplace compensation, even though they do not appear on a paycheck.

A study by the Employee Research Benefit Institute (ERBI) found that a majority of employees are more likely to participate in a retirement savings plan if there's a company match. Other data from an American Century Investments survey suggest that more than a third of respondents would take a 401(k) match over a salary increase.

But recently, some companies have begun scaling back or pausing these contributions as part of broader cost reviews.

Data from the U.S. Bureau of Labor Statistics show that benefits make up a significant share of total compensation costs. As a result, retirement contributions are sometimes adjusted alongside other expenses.

Should you still contribute to a 401(k) if there is no employer match?

Traditional 401(k) contributions still reduce taxable income in the year they’re made, and investments continue to grow tax-deferred until withdrawal. So even without an employer match, you still get the same tax deduction on your contributions, but you lose the additional tax-deferred dollars your employer would have added.

Even so, some workers continue contributing to capture the tax break.

For example, someone in the 22% federal tax bracket who contributes $15,000 without a match could potentially lower their federal tax bill by about $3,300 before factoring in state taxes.

At the same time, the loss of an employer match is prompting some workers to reassess their strategy. One approach is to maintain their contribution rate to stay on track with retirement savings. Another is to scale back to preserve take-home pay or prioritize other financial goals.

In some cases, a shift in the employer match pushes employees to consider savings options aside from a 401(k). For example:

• A Roth IRA doesn't offer an upfront deduction but may provide tax-free income later in retirement.
• Some may also pay closer attention to Health Savings Accounts (HSAs) if they are available through employer health plans.
• A key benefit of HSAs is that they allow eligible workers to contribute pre-tax money toward medical expenses. Additionally, investments can grow tax-free, and withdrawals used for qualified healthcare costs are also generally tax-free.

HSAs aren't a replacement for retirement accounts, are subject to contribution limits and sometimes involve "hidden costs", but they can provide another way for some households to lower taxable income and build longer-term savings.

401(k) tax benefits: Bottom line for retirement planning

When employer matches disappear or shrink, some workers may need to contribute more of their own money to stay on track for retirement. And while the changes might look relatively small year to year, losing thousands of dollars in annual employer contributions can affect long-term retirement balances.

For example, for a $75,000 earner losing a 4.6% match (~$3,450/year), that gap over 20 years at a 6% average rate of return could compound to $135,000 less at retirement.

So, what can you do? If your employer suspends or reduces its 401(k) match, your approach to saving might need to shift.

• If you were only contributing enough to get the match, you might want to revisit your contribution rate.
• If you can afford it, increasing contributions could potentially help keep you on track.
• However, if your cash flow is tight, it may make more sense to hold steady while prioritizing emergency savings or high-interest debt.

Overall, though, it's important to keep in mind that without an employer match, there is no one-size-fits-all answer when it comes to next steps.

Saving decisions depend, as always, on your personal budget, tax considerations, and long-term financial goals.

Note: Because everyone’s financial and tax situation is different, keep in mind that this is general information, not personal advice. Consult a tax professional or financial adviser to determine the best course of action for your individual circumstances.

Related

• 2026 Federal Tax Brackets and Income Tax Rates
• 2026 HSA Contribution Limits Are Set
• Is It Time to End 401(k)s to Save Social Security?
• Roth Rule Changes to Know This Year

After months of scrutiny around the Federal Reserve and its leadership, President Donald Trump’s nominee, Kevin Warsh, is the chair of the Federal Reserve, succeeding Jerome Powell.

Notably, the 54-45 U.S. Senate vote margin to confirm him was reportedly the narrowest in modern Fed Chair history.

As Warsh moved through key Senate confirmation steps, he signaled support for maintaining the Fed’s "strict independence" in interest rate decisions, as lawmakers from both parties pressed him on how he would navigate inflation, borrowing costs, and financial conditions.

Whether a Fed chair is viewed as politically independent matters since confidence in the Fed’s inflation strategy can influence markets, borrowing costs, and expectations for future interest rates.

Powell, for his part, has said he plans to remain on the Federal Reserve’s Board of Governors for a period of time.

All of this wrangling aside, a practical question is emerging for some: What does a change in leadership at the Fed actually mean for taxes?

How higher interest rates impact taxable income

First things first: The Federal Reserve doesn’t set tax rates. Congress does that with implementation help from the U.S. Treasury Department and the IRS. However, the Fed sets interest rates through a vote of its policymaking committee, the Federal Open Market Committee (FOMC), led by the Fed chair.

Still, no Fed chair unilaterally controls interest rates and inflation, labor market conditions, and broader economic trends often carry more weight than any one official’s preferences.

But…the Fed's interest rate decisions can ripple through the economy, affecting household finances, including your taxable income. And that impact is often most visible in savings and cash returns.

• At the moment, with interest rates still elevated, savings accounts, money market funds, and short-term Treasurys are generally paying far more than they did just a few years ago.
• High-yield savings accounts are now commonly near the 4%–5% range, and Treasury bills are offering similar yields.
• For some, that can translate into hundreds or even thousands of dollars a year in interest income, depending on account balances.

The bad news? That income is taxed as ordinary income at the federal level in the year that it's earned. So for retirees, savers, or others holding significant cash outside tax-advantaged accounts, that can translate into a higher tax bill.

As a result, retirees and conservative savers who moved money into CDs, money market funds, or Treasury bills during a rate-hiking cycle might be among the households most likely to notice a difference when filing taxes.

Note: Interest from savings accounts is generally taxable at both the federal and state levels, while interest earned from U.S. Treasury securities is exempt from state and local income taxes.

How different types of income are taxed

It's also important to keep in mind that wages, interest, investment gains, and home sales are all treated differently under the U.S. tax code, and those differences shape when taxes are owed — and how much.

Wages are taxed as ordinary income as they are earned, typically through withholding from paychecks. (As mentioned, interest income and short-term investment gains are also taxed at ordinary income rates.)

• Long-term capital gains on stocks are generally taxed at rates of 0%, 15%, or 20%, depending on income.
• Short-term gains are taxed at ordinary income rates. In many cases, taxes are only triggered when assets are sold.

As a result, two households with similar overall returns can still face very different tax outcomes depending on how those returns are generated.

Inflation and “bracket creep”

And then there's inflation. Over the past few years, relatively high inflation has driven up the cost of living (by more than 20% over the past five years, by some estimates). However, this year, wage growth hasn't kept pace for many workers, even as savings income has risen alongside higher interest rates.

That mix can increase taxable income even when households don’t feel financially ahead.

For example, a raise that only offsets higher costs for rent, groceries, or insurance can still push more income into a higher tax bracket, and higher interest earnings can have a similar effect.

Yes, the IRS adjusts tax brackets annually for inflation, which is designed to help blunt the impact. But when wages, interest income, or investment gains rise simultaneously, larger portions of income can still be taxed at higher marginal rates.

Fed chair news: What a new Fed chair changes and what it doesn’t

Worth noting: Any policy shifts under new Fed leadership would likely unfold gradually and be shaped primarily by inflation and growth trends. So, for many people, any near-term impact is likely to be limited.

The next Federal Reserve policy meeting is happening now, June 16–17, when officials will update their outlook for inflation, growth, and the expected path of rates through 2026.

If rates remain elevated:

• Savings accounts and money market funds continue generating higher taxable interest
• Households with large cash balances see more income reported to the IRS
• Some savers may face higher tax bills or smaller tax refunds

If rates decline:

• Cash yields can gradually ease
• Borrowing costs typically come down
• Financial activity in housing and equities tends to pick up

For some, the tax shift tied to interest rates is already visible…interest income that barely registered a few years ago is noticeable when filing taxes.

Of course, that doesn’t necessarily mean people are better off, but it can change what they owe the IRS when federal tax returns are due.

Bottom line? You don’t necessarily need to follow every single Fed meeting or policy speech. But changes in interest rates — and the people setting them — can still quietly shape what you end up owing at tax time. So stay tuned.

Related

• How High-Yield Savings Account Interest is Taxed
• Capital Gains Tax Rates and Brackets for 2026
• Types of Income the IRS Doesn't Tax

Ever arrive at a beach town only to realize you forgot your prescription sunglasses or high-SPF sunblock? It can be frustrating and expensive.

According to packing data from Radical Storage, the average traveler forgets two essential items per trip, resulting in about $53 in immediate replacement costs.*

Some replacements are a total loss, but did you know that you can turn others into a tax advantage?

By leveraging your health savings account (HSA), you can repurchase forgotten essentials using pre-tax dollars — effectively giving yourself a 25-30% "tax discount" on vacation necessities (when combined with FICA savings).

Here are the most commonly forgotten travel items that are HSA-eligible and the strict IRS rules you need to know to possibly claim them.

*Radical Storage is a global luggage storage service that surveyed 1,511 Americans regarding their packing habits and the items they most commonly forget.

IRS Rules for HSA purchases in 2026

Before we dive into our list, let's cover the 2026 IRS rules for a purchase to be considered "HSA-qualified."

The expense must be primarily for the diagnosis, cure, mitigation, treatment, or prevention of a specific health condition for you, your spouse, or your tax dependents. Otherwise, you may owe penalties and taxes on non-qualified purchases.

Here's a handy guide to help you figure out if your purchase could be HSA-eligible:

• Check the "HSA store." Before you head to the register, use your HSA provider's mobile app. Many now let you scan a product's barcode to confirm eligibility. You can also browse pre-vetted items at the HSA Store or Amazon's HSA/FSA shop.
• Identify items requiring an LMN. Some travel aids, like high-grade compression socks or specialized orthopedic pillows, may require a letter of medical necessity (LMN) from your doctor to qualify. This letter details why the purchase is medically necessary for your or your spouse's/dependent's condition.
• Keep digital backups. Although your HSA debit card may be accepted at major pharmacies, the IRS requires proof of the item purchased, not just the total spent. Snap a photo of your receipt immediately and save it in your digital files.

Travel Essentials

1. Broad-spectrum sunscreen (SPF 15+)

Sun protection is one of the most frequent casualties of rushed packing, with 18.3% of travelers leaving it behind. But if you have to buy a replacement bottle at a pricey resort gift shop, your HSA has you covered.

• The IRS rule: The sunscreen must offer broad-spectrum protection and have an SPF rating of 15 or higher.

What about bug spray? Standard insect repellent is a "general health" item and is not HSA-eligible. However, if you buy a sunscreen that includes built-in bug spray, the entire purchase may become eligible, provided the primary purpose is qualified sun protection.

2. Prescription shades

According to the Radical Storage data, 17.6% of travelers forget their sunglasses when packing for a trip. And when you're planning outdoor fun, your eyes may need more than a $5 pair of gas station shades. Fortunately, replacing your prescription sunglasses might qualify for HSA eligibility.

• The IRS rule: Fashion shades and traditional, "beach shop" sunglasses don't qualify. You need prescription sunglasses designed to correct vision and protect against UV rays.

Beyond the frames, contact lens supplies and lubricating eye drops typically qualify for HSA eligibility. This includes travel-sized solutions, replacement cases, extra lenses, and over-the-counter (OTC) drops for dry "airplane eyes."

3. OTC medications

It may not come as a surprise that people often forget painkillers while traveling, with 13.7% of travelers reporting leaving home without their trusted bottle of OTC meds; many more medicinal remedies qualify for HSA spending, though.

• The IRS rule: No prescription is needed. You can purchase Advil, acetaminophen, and other pre-packaged OTC remedies to treat pain relief. Cold/flu medications are also generally included, as are motion sickness pills and antacids.

Not explicitly listed in the survey are personal care products, like tampons, pads, and acne treatments, which are HSA-eligible. This is thanks to the CARES Act, which permanently expanded the list of "qualified medical expenses" to include menstrual care and OTC medications without a doctor's prescription.

4. First aid kits

Unfortunately, 12.8% of travelers report leaving behind a first aid kit, which can be a crucial travel essential in case of emergency. Fortunately, these kits are often eligible for HSA spending.

• The IRS rule: Everything from premade first-aid kits and individual components (like bandages, gauze, and antibiotic creams) is eligible. Still, special non-medical carrying cases for the kit may not be covered.

5. Medicated moisturizers and aloe vera

The data shows that 10.9% of travelers forget to pack their daily moisturizer. If your skin takes a beating from the sun, wind, or airplane air, your replacement lotion might qualify for tax-free HSA funds, provided it meets IRS regulations.

• The IRS rule: Standard cosmetics and regular beauty lotions do not qualify. To use your HSA, the moisturizer must contain a specific medicated ingredient designed to treat a medical condition, such as severe sunburn, eczema, or dermatitis.

6. SPF Cosmetics and lip balms

Vanity kits are easily left behind, with 10.3% of travelers forgetting their makeup. Even though standard foundation or lip gloss is considered a personal care expense, your sun protective makeup may be HSA-eligible.

• The IRS rule: Lip balms, foundations, and skin tints qualify for HSA reimbursement only if they are explicitly labeled SPF 15 or higher, offer broad-spectrum protection, and primarily serve to prevent sunburn.

The survey did not mention allergy medications, yet the local environment on vacation can trigger new reactions. Thus, if you find yourself sniffling and suffering, know that most OTC antihistamines and nasal sprays are generally fully eligible.

7. Prescription meds

About 9.8% of travelers have been there: they got to their destination only to realize they forgot their meds. When you need to make a surprise run to a foreign pharmacy, here are the HSA eligibility rules governing prescription meds.

• The IRS rule: Always eligible, including "rush" refills. However, nutritional supplements, vitamins, and toiletries are merely for maintaining general health and are not considered qualified.

8. Underwear (that's medically necessary)

Only 9.6% of travelers forget their underwear while traveling, according to data from Radical Storage. Certain repurchases might be eligible for your HSA funds. (So no, your standard boxers don't count!).

• The IRS rule: Specialized "adaptive clothing" can be HSA-approved if it serves a medically necessary purpose, like a pumping bra, certain postpartum care products, etc. But general hygiene items are not eligible.

9. Specialized swimwear

Swimwear is often left in the dresser drawer, with 9.3% of travelers reporting forgetting bathing suits or similar wear at home. Though swim trunks might not qualify for HSA eligibility, you may be able to use tax-free funds on prescription swimwear.

• The IRS rule: Items for specialized wear, like prescription goggles or masks with corrective lenses, may qualify if they are used to treat a condition. Otherwise, an LMN may be necessary for other types of bathing suits.

11. Sneakers and sandals to treat a condition

Footwear like flip-flops and tennis shoes is often forgotten at home, with travelers reporting forgetting to pack these essentials 7.4% to 8% of the time. Though if you meet specific requirements, you might be able to repurchase them with HSA funds.

• The IRS rule: Shoes must directly help manage or improve a medical issue. Common examples include orthotic inserts, gel pads, and orthopedic footwear, though they may require an LMN.

What about accessories? Long flights can take a toll on the body, leading many travelers to invest in biometric trackers. In 2026, popular medical devices like the Oura Ring and certain smart watches may be HSA-eligible if they have an LMN from your doctor stating the specific condition the device monitors and/or treats.

Yet if you're using your HSA for a high-end medical device, many experts recommend paying out of pocket, then obtaining your LMN and submitting the receipt for reimbursement. This may help ensure your purchase meets IRS rules before linking the item to your HSA account.

Don't forget your passport

Approximately 6.3% of travelers report forgetting their passport, which is a major headache — but no, the replacement fees are not HSA-eligible (despite the blow to your mental health). However, your medical care in a foreign country is often covered by your HSA funds.

• The IRS rule: Passports aren't eligible for HSA spending. Instead, hospital and urgent care for legal, non-elective procedures and standard dental work abroad are often qualified tax-free expenses.

Prescription drugs may also qualify if they are consumed abroad (importing them back to the U.S. generally makes them ineligible). The drug must also be legal in both the country you bought it and back home in the U.S.

Also, many U.S.-based HSA debit cards won't work at international locations. Thus, you might want to pay with a travel credit card, keep the itemized receipt, and then reimburse yourself through your HSA portal once you're back on American soil.

Bottom line: Pack ahead

Although no one likes to realize they left their travel essentials behind, a forgotten bag doesn't have to mean a total financial drain.

By utilizing your HSA for these 2026 often-forgotten items, you can potentially get a discount on repurchased items. So pack carefully, keep a record, and enjoy the peace of mind that comes with a tax-advantaged suitcase, no matter what you forget.

Happy trails!

This article is for informational purposes only and does not constitute professional tax or financial advice. Tax laws are subject to change and vary by individual circumstances. Consult with a qualified tax professional regarding your specific situation.

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Once tax season comes to an end, most families shift their focus away from planning. This year, that may be a mistake.

A new federally backed savings account for children, known as a Trump Account, is set to launch this summer, offering a $1,000 government-funded starting balance and tax-deferred growth. For families already thinking about 529 plans and long-term wealth transfer, the question isn't whether to pay attention — it's how to use this new tool effectively.

For families with children and grandchildren under age 18, the first step to participate can be taken now by filling out IRS Form 4547 on the official Trump Accounts site. While simple in execution, this decision has the potential to become a meaningful building block within a broader, long-term financial plan.

How Trump Accounts work

Created under the One Big Beautiful Bill Act (OBBBA), signed into law in July 2025, Trump Accounts introduce a new way to build wealth for minors. Structurally similar to a traditional IRA, the accounts offer tax-deferred growth, meaning contributions are made with after-tax dollars, but investment gains compound without annual taxation.

From a planning perspective, this creates another avenue to extend tax-efficient growth across generations.

What makes the program particularly compelling is the built-in starting point. Eligible children — those born between January 1, 2025, and December 21, 2028, who are U.S. citizens with valid Social Security numbers — receive a $1,000 federal seed contribution.

While modest on its own, when viewed through the lens of long-term planning, that initial investment represents something more powerful: Time in the market.

The importance of starting early cannot be overstated. When capital is invested early and allowed to compound, even relatively small contributions can grow meaningfully.

For example, a family contributing $5,000 annually through age 18, alongside the $1,000 federal seed and a 6% return, could accumulate roughly $190,000 by adulthood — and more than $2 million by retirement if left untouched. While hypothetical, the scenario underscores how early contributions, not just large ones, drive long-term outcomes.

Trump Accounts are intentionally structured to reinforce that discipline. Investments are limited to low-cost U.S. equity index funds or ETFs, with expense ratios that do not exceed 0.10%.

Contributions are capped at $5,000 annually (indexed for inflation), and assets are locked until age 18. Together, these features create a framework designed for consistency and long-term growth without the burden of short-term decision-making.

Eligibility is broad, which allows for coordinated family planning. Parents or legal guardians typically open the account, but grandparents and others can contribute. This creates an opportunity to align gifting strategies across generations and to begin introducing younger family members to long-term investing in a tangible way.

Trump Accounts and 529 plans

For many families, the question is how Trump Accounts fit alongside existing strategies, particularly 529 plans. In our view, this is not an either-or decision. Each serves a distinct purpose.

For many families, 529 plans remain an effective tool for education-specific savings, offering tax-free growth when used for qualified expenses. Trump Accounts, by contrast, are not limited to education. They provide flexibility beyond college, allowing assets to continue compounding into adulthood.

This means they can be used to support broader financial independence, while also instilling a lifelong habit of regular, incremental investment over time.

Used together, these tools can help families take a more comprehensive approach — funding education needs while also building long-term wealth. The addition of the $1,000 federal contribution further strengthens the case for early participation, particularly when integrated into an overall plan.

How to get started

Getting started is straightforward. While it was possible to include IRS Form 4547 with your 2025 tax return, it is now available on the Trump Accounts website, allowing you to complete the process online if you missed the opportunity.

Ultimately, Trump Accounts are not just a new savings vehicle – they are a new planning consideration. For families focused on generational wealth, they offer a structured way to start earlier, invest consistently and align financial decisions with long-term intent.

For families focused on building wealth for future generations, the real advantage of Trump Accounts isn't just tax deferral — it's time.

Starting earlier, even with modest amounts, can meaningfully change long-term outcomes. This is a rare opportunity to get a head start on putting that principle into practice.

Related Content

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• Should You Start a 'Trump Account' for Your Child?
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• What Financial Lessons Are Your Kids Learning by Watching You? 5 Ways to Help Them Develop Healthy Money Habits

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

The term "millionaire" has long been shorthand for financial success — and today, more Americans are reaching that milestone than ever before.

According to a Bloomberg analysis, there are now more than 24 million millionaire households in the United States, accounting for nearly one in five households.

What’s driving that growth is just as notable. Roughly a third of those households have crossed the million-dollar mark since 2017, fueled in part by rising home values and a strong stock market. And in many cases, that wealth isn’t sitting in cash. Instead, it’s built through assets like home equity and investment accounts, which have steadily pushed more households into millionaire territory.

But most millionaires are older

The majority of millionaires are older — largely because building wealth takes time. The longer you’re in the workforce, the more opportunities you have to increase your income, invest and benefit from long-term growth.

That pattern shows up clearly in the data. According to Empower average net worth rises significantly with age:

• Gen Z: $86,945
• Millennials: $333,096
• Gen X: $1,132,089
• Baby Boomers: $1,683,641

It’s not surprising, then, that most millionaire households fall into Gen X and Boomer age groups. These generations are in or nearing their peak earning years — typically mid- to late-career — when income is higher and there's been more time to accumulate assets.

Compound interest also plays a major role. By reinvesting earnings, households can generate returns on both their original investments and prior gains. Over time, that "interest on interest" effect accelerates wealth growth, often most noticeably later in life, after decades of compounding.

Why becoming a millionaire young is so rare

While there are younger millionaires, it’s still relatively rare for individuals or households to reach that status early in life. Incomes tend to be lower at the start of a career, when many people are working entry- or mid-level jobs.

At the same time, financial pressures can make it harder to build wealth. Student loan debt and rising housing costs are major factors. According to the Education Data Initiative, the average federal student loan balance is about $39,075, and it can take close to 20 years to pay off that debt.

Time is another key challenge. Investments need years, often decades, to grow, so even those who start investing early may not see significant returns right away. While some individuals may reach millionaire status through an inheritance, building wealth through earnings and investing is typically a long-term process.

The real takeaway: Time matters more than income

Time is one of the most powerful factors in building wealth. One of the clearest examples is compound interest. The ability to earn returns not just on your initial investment, but on your past gains as well.

For example, if you invest $5,000 and earn a 5% annual return, your balance would grow like this over time:

While the early gains may seem modest, the growth accelerates over time as returns begin to compound on themselves.

Starting early gives even moderate earners an advantage. By investing consistently and increasing income over time, households can steadily build wealth and potentially reach millionaire status later in life.

When it comes to long-term investing, consistency matters more than perfection, and establishing strong financial habits early can make a lasting difference.

Use the tool below, powered by Bankrate, to explore personalized financial offers tailored to help you reach your goals.

How to start building wealth even if you're not earning six figures

You don’t have to be earning six figures to start building wealth. Focus on developing consistent financial habits that will make the most of your income:

• Invest early: Start investing early on to take advantage of compound interest. If your employer offers a 401(k), take advantage of it, especially if your employer offers to match your contributions. A Roth IRA is another solid option, since your withdrawals in retirement are tax-free, maximizing the money you have to support your lifestyle.
• Increase your income: Look for ways to grow your income over time. That might mean asking for a raise at work, working your way up the career ladder within your company, going back to school or even changing your career. Side hustles and freelance work can be another helpful way to boost your income.
• Avoid lifestyle creep: As you increase your income and are able to save more money, it can be tempting to spend more money on things you don’t really need, like a nicer car or a larger home. This lifestyle creep can eat into your savings and limit your ability to invest and truly grow your wealth, so stay focused on your financial goals.
• Use "boring" strategies: Some of the most effective wealth-building strategies are also the least exciting. Automating contributions to your investment accounts can help you stay consistent without overthinking each decision. While day trading may seem fast-paced and appealing, it’s rarely a reliable path to long-term wealth. Instead, many investors turn to index funds. They may not be flashy, but their built-in diversification helps reduce risk while supporting steady, long-term growth.

Millionaire status may not mean what you think

Reaching millionaire status can feel like you have “made it,” but it doesn't necessarily mean you are wealthy, at least not in today’s economy. Inflation has pushed up the cost of everything from housing to vehicles, so a $1 million net worth may not stretch as far as you expect.

In fact, many millionaires do not feel wealthy. Where you live, how much of your wealth is tied up in assets like home equity and how much cash you have available all play a role in the lifestyle you can afford.

While becoming a millionaire is still a worthwhile goal, it may be more useful to focus on the lifestyle you want to support. From there, you can build a financial plan that helps you achieve it.

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Not long after mastering sleep and feeding schedules, new parents will inevitably turn their attention to saving for their child's education and future.

From 529 accounts to Roth IRAs, parents can choose from several options to help their children enter the world on strong financial footing, and starting this year, they'll have another tool in their arsenal: Trump Accounts.

Starting in July, parents or guardians of children who have not turned 18 by the end of the year can open and contribute to a tax-deferred investment plan that resembles a traditional retirement or education account, with some important differences.

Like a traditional IRA, a Trump Account grows tax-deferred, with earnings taxed upon withdrawal and early penalties before the age of 59½.

So far, the biggest benefit of opening a Trump Account is for new and expectant parents. Children born from January 1, 2025, through December 31, 2028, might be eligible for a $1,000 federal grant to seed their new account.

A complement, not a replacement

While Trump Accounts might be helpful to parents as they begin helping their children build their retirement nest egg, they aren't necessarily a replacement for educational funds such as 529 accounts or traditional IRAs. There are several important differences between these types of accounts.

Unlike 529s, which grow tax-free, Trump Accounts are taxable upon withdrawal. Additionally, parents and other contributors are limited both in how much they can give — contributions are capped at $5,000 per year, per child (indexed to inflation), which is less than traditional IRA maximums — and in the types of investments you can make.

Investments in Trump Accounts must be used only for certain broadly diversified, low-cost investments such as index funds, exchange-traded funds (ETFs) and other investment vehicles that track broad-based U.S. equities.

With Trump Accounts, withdrawals are permitted only once the account's "growth period" ends on December 31 of the year the child turns 18. Withdrawals are subject to taxes and penalties. At that time, the account can be rolled into an existing IRA.

Prepare but maintain perspective

Despite many unknowns, new parents whose children would be eligible for the $1,000 federal grant can sign up by filling out IRS Form 4547 as part of their 2025 tax returns (even if you're planning on filing an extension, you still need to file the form by April 15).

While it's smart to take advantage of a potential government grant, we don't expect that Trump Accounts will displace other types of investment vehicles. We continue to believe that traditional education vehicles are the best way to save for a child's education, since they provide tax-free growth.

Additionally, with the passage of the SECURE 2.0 Act in 2022, parents who invest in a 529 account can overfund those accounts and roll over up to $35,000 into a Roth IRA, which will grow tax-free upon withdrawal at retirement.

Outside of 529 plans, most working-age children and their parents fund their retirement through a Roth IRA because of the significant tax advantages.

Do your due diligence

In these early stages, as we learn more about Trump Accounts, we don't see much downside to filing the initial paperwork and being prepared.

There are still a lot of unknowns related to custodial procedures, so while awaiting regulatory guidance, we urge families to take the time to compare plans, understand the tax implications, educate family members or employers who have expressed interest in supporting these efforts and begin creating a contribution strategy.

The elephant in the room (pun intended) might be the political factor, given the naming of these accounts and the numbering of the IRS form.

Regardless of your political leanings, it can't hurt to get your ducks in a row and prepare, especially if you're a new parent or an expectant parent who would qualify for the $1,000 government grant.

Ultimately, any new vehicle that will help parents build a nest egg for their children is a good thing. Consider Trump accounts to be a potential new savings option for parents of young children that we can add to a growing list of accounts.

Janney Montgomery Scott LLC, its affiliates, and its employees are not in the business of providing tax, regulatory, accounting or legal advice. These materials and any tax-related statements are not intended or written to be used, and cannot be used or relied upon, by any taxpayer for the purpose of avoiding tax penalties. Any such taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax adviser.

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• Should You Start a 'Trump Account' for Your Child?
• 'Trump Accounts' for Newborns: A Great Idea That Could Be Better
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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

As you approach retirement, you're likely to reallocate some of your funds to less-risky investments, especially given market volatility. One smart option to consider that can earn you a healthy return without the risk is a jumbo CD.

Jumbo CDs offer many advantages. First, you'll earn rates as high as 4.35%, keeping you ahead of rising everyday costs — March's CPI report showed inflation rose 3.3% year over year. Second, you don't have to tie up your money for a long period of time. Most jumbo CDs come with terms from six months to one year.

In turn, you can put some money in, earn thousands of dollars effortlessly, and have quick access back to your cash. Before signing up for one, let's take a look at how they work and the challenges of using one.

Jumbo CDs: Earning higher rates without the long-term commitment

As its name implies, a jumbo CD refers to the amount of money you deposit in it. Most banks require large deposits — think $50,000 to $100,000.

Because you're investing a higher amount, banks tend to reward you with higher returns than you would find on many savings accounts. Once your term expires in six months to a year, you'll have the option to renew it (some banks do this automatically) or you can close the account and invest in something else.

What's great about this approach is that you don't have to lock in your money for years at a time. If prices continue to rise, you might want to consider something with a little more risk and higher rewards to keep ahead in the future. A jumbo CD gives you the flexibility to earn a healthy return quickly, without overcommitting.

Use this Bankrate tool to compare options:

Before opening one, consider these things…

First, you must be okay parting with that money. Jumbo CDs also have early termination fees, amounting to months of earned interest.

If you need to break open the CD early, it could cost you hundreds to thousands of dollars, so only do this if your cash flow and emergency fund are in a good place.

Furthermore, it won't be a smart move if you're looking to catch up with your retirement savings. While you won't have the risk, moving money from investments (where you can earn significantly more historically) to savings could shortchange your future if you need those higher returns.

How much can I make a jumbo CD?

The other thing to consider is how much you'll gain from opening one. This can help you chart your savings progress to ensure the earnings keep you on course.

Thankfully, a jumbo CD is one of the best ways to grow your cash fast. Here are some examples of how much you can earn in a short period of time:

As this table illustrates, if you can devote $100,000 to a jumbo CD, you'll earn over $4,000 merely for opening an account. And you'll have a few other benefits too:

• If you choose a bank offering FDIC insurance, your assets are protected up to $250,000 per account holder
• In one year, you can reinvest this money in the stock market or try another investing solution
• If the Federal Reserve cuts rates during your term, it won't impact your earnings

Ultimately, the benefits of a jumbo CD make it a smart bridge investment if you're approaching retirement and want to earn a healthy return without the risk.

Just know that any earnings on CDs are taxable as ordinary income, so make sure to include this in your financial planning so you're not surprised come tax day. That aside, this is one of the best ways to keep your cash safe while growing it at a rate that outpaces rising inflation.

Related content

• See Our Best Jumbo CD Rates
• March CPI Report: Iran War Lifts Inflation to a 2-Year High
• Jumbo CD vs High-Yield Savings: Which is the Best Place to Store $100k?

Question: My wife and I were delighted to find we're getting a higher tax refund of around $10,000 this year. I think we're in a good place to use the money for a fun vacation or other splurge, but, she's worried about the future and wants to save it. What should we do?

Answer: When making significant money decisions as a couple, it's common for people to want different things. Money disagreements are signs of a healthy relationship because you're communicating.

Even if those conversations are stressful, it's a good sign. Turning attention to whether you should splurge or save, there's an easy way to figure this out. All you need to do is answer a few simple questions.

1. If you lost your job tomorrow, how long could you pay your bills?

You should have an emergency fund established to cover expenses in case of a job loss. How much do you need to save? It depends on your circumstances.

If your household relies on one spouse to cover all the earnings and expenses, you'll likely need at least six months saved. Meanwhile, if both people earn around the same amount of money, three months is a good benchmark.

Where's the best place to build your emergency fund? A high-yield savings account is a great place to start because you can transfer money from your checking account to that savings account on payday and treat that money as "don't touch." Plus, with rates as high as 4.20% APY, you'll outpace inflation.

Use this Bankrate tool to find the best high-yield savings accounts for you:

2. Are your retirement savings on track to ensure your financial security for the future?

Investing that tax refund could be a huge boon for your future self, who'll thank you, especially if you're behind on where your retirement savings should be. To demonstrate, if you took that $10,000 and placed it all in a Vanguard S&P 500 index fund, in 20 years, that return could balloon to almost $40,000, using historic returns.

Obviously, this approach comes with some risk. There's no guarantee that historic returns are indicative of future performance for index funds, and if inflation continues to rise, it can impact how much your money will be worth when you need it.

Still, hypothetically earning close to $30,000 can be a smart move that helps you catch up with your retirement savings.

3. Are you carrying high-interest debt?

The average credit card APR is 19.58%, according to Bankrate. If you have a $5,000 credit card balance and make the minimum payment with the average APR, it could take you 273 months to pay it off. That's a long time throwing your money away on interest.

If you have any high-interest debt, I recommend paying that debt off first. It'll take payment(s) off your monthly budget (which you can use to pad savings or retirement), improve your credit and help you get on the road to becoming debt-free.

There are several ways of going about this. You can do the debt snowball method, in which you pay off your lowest balance first, while making minimum payments on other debts. If the $10,000 clears all your high-interest debt, consider using it for that, provided your savings are in decent shape.

4. What if none of these apply to me?

You're in the sweet spot. In this scenario, you should devote $7,000 to $8,000 to save and use the rest to splurge. It allows you both to enjoy the windfall of your tax refund.

It's a smart way to shelter from rising inflation. With diesel prices soaring, the costs of everyday goods will rise. Earmarking a significant portion of those funds to a high-yield savings account is a smart way to offset higher prices.

You'll get to benefit from it now and later. You'll get to splurge on a home upgrade or other treat, while she gains peace of mind knowing that your future selves will thank you for saving.

Related content

• IRS Tax Refund Schedule 2026: When Will Your Refund Arrive?
• 6 Steps to Quickly Build Your Emergency Fund
• Best High-Yield Savings Accounts — April 2026
• How to Invest in ETFs for Beginners

For decades, the retirement playbook looked pretty similar: get a stable job, contribute to a 401(k), increase your savings over time and let compounding do the heavy lifting. But for Gen Z, roughly those born between the late 1990s and early 2010s, that path is not always realistic.

Many younger workers are entering adulthood in a high-cost environment, where rent, groceries and insurance take up a larger share of their income. At the same time, student loan payments have resumed, and building emergency savings often feels more urgent than long-term investing.

There is also a structural shift underway. More Gen Z workers are earning income through freelance work, gig jobs or contract roles, positions that typically do not come with employer-sponsored retirement plans. So it's not that Gen Z isn't thinking about the future. It's that their financial reality is forcing them to prioritize differently, at least for now.

The data tells a mixed story

If you zoom in on the numbers, Gen Z's retirement picture is not as straightforward as it may seem. On one hand, balances are still relatively low. The average Gen Z worker has about $13,500 saved in a 401(k), according to a Fidelity retirement analysis. While that is the smallest amount of any generation, it largely reflects the fact that many are just starting their careers.

At the same time, contribution habits are more encouraging. Gen Z workers are saving at a total rate of about 10.9% of income when employer matches are included, also based on the Fidelity survey, which is not far off from older generations.

In some ways, they are even ahead. Roughly 76% of Gen Z workers are already saving for retirement in some form, whether through a workplace plan or independently, according to a Nationwide survey. Many are also starting earlier, with contributions beginning around age 23, nearly a decade sooner than previous generations.

There are also signs of increasing engagement. Participation and savings rates among Gen Z have been rising in recent years, even as living costs remain elevated.

Why starting early still matters more than the amount

One thing has not changed: time is still the most powerful factor in building retirement savings.

Starting early, even with modest contributions, can make a significant difference over the long term because of compounding. That is when your investment earnings begin generating their own earnings.

For example, someone who starts contributing in their early 20s, even at a low rate, has a meaningful advantage over someone who waits until their 30s or 40s to begin.

The hardest gap to close is not necessarily how much you save, but the years you miss. That is why consistency matters more than perfection. Even small contributions today can build momentum over time.

A simple comparison shows how much time can matter, even when contributions are the same.

This example uses consistent annual contributions, a 7% average return and no withdrawals.

Common mistakes Gen Z (and new savers) are making

With so many competing financial priorities, it's easy to see why retirement can take a back seat. But a few common missteps can make a long-term difference.

• Waiting until income increases: It's tempting to delay saving until you feel more financially comfortable. But higher income often comes with higher expenses, making it just as hard to start later.
• Skipping the employer match: If you have access to a 401(k) with a company match, not contributing enough to get the full match is essentially leaving free money on the table.
• Treating retirement as optional: There's a growing mindset that retirement can be flexible or delayed indefinitely. While flexibility can be helpful, it shouldn't replace having a plan.

How to build a retirement strategy in your 20s

If you're in your 20s, retirement can feel far away. Then, with everything else competing for your money, it's easy to push it down the list. But this is actually one of the most valuable windows you have to get started and build a simple system you can stick with.

1. Start small and make it automatic

You don't need to max out your contributions right away. Starting with just 1% to 3% of your income is enough to build momentum. If it's deducted automatically from your paycheck, you're less likely to miss it or skip it.

2. Increase contributions gradually

As your income grows, aim to increase your savings rate little by little. Even bumping it up by 1% each year can make a noticeable difference over time without feeling overwhelming.

3. Take full advantage of employer benefits

If your job offers a 401(k) match, try to contribute enough to get the full match. It's one of the easiest ways to boost your savings early on, and it doesn't require earning more to benefit from it.

4. Use Roth accounts when it makes sense

Early in your career, you're often in a lower tax bracket. That can make Roth contributions especially valuable, since you pay taxes now and can withdraw funds tax-free later.

5. Balance retirement with short-term goals

It's okay if you're also building an emergency fund or paying off debt. A balanced approach where you contribute something to retirement while handling immediate needs is often more sustainable than trying to do everything at once.

6. Focus on consistency, not perfection

There will be months when you can contribute more and times when you may need to scale back. What matters most is staying engaged and getting back on track when you can.

In your 20s, your biggest advantage isn't how much you save. It's that you're giving your money time to grow.

What older generations can learn from Gen Z

While Gen Z faces unique challenges, there are also some strengths in how they're approaching money.

They tend to be more adaptable and willing to adjust strategies based on their circumstances rather than sticking to a rigid plan. They're also more comfortable using technology to manage their finances, from budgeting apps to automated investing tools.

And perhaps most importantly, they're open to rethinking what retirement looks like. For some, that might mean a traditional retirement. For others, it could mean more flexibility like part-time work, phased retirement or career shifts later in life.

Start early, stay consistent and adjust as you go

Gen Z may not be saving for retirement the same way previous generations did, but that doesn't mean they're doing it wrong. They're navigating a different financial landscape where short-term pressures are real and flexibility matters.

The key takeaway for any generation is this: retirement success doesn't come from getting everything right upfront. It comes from starting where you are, staying consistent and adjusting as your situation evolves.

Even in a high-cost environment, small steps taken early and repeated over time can add up in a meaningful way.

Building a retirement strategy doesn't have to be something you figure out alone. A financial professional can help you prioritize today's financial goals while creating a long-term plan that grows with you.

Use the Bankrate tool below to connect with a financial professional who can help build a retirement strategy tailored to your goals:

Related Content:

• The Average Retirement Savings by Age
• 5 Ways to Catch Up on Retirement Savings
• Best High-Yield Savings Accounts

It's true what people say: If you want the most reward, you have to take the most risk. But prudent investing is about taking calculated risks, not blind ones. And after three consecutive years of hardy stock returns, it may be time to dial down the risk in your portfolio, in preparation for the eventuality of a market stumble.

Or your circumstances in life might dictate a more cautious stance, for whatever reason. De-risking is about planning ahead.

"After the risk has happened, it's too late," says Tim Steffen, director of advanced planning in the wealth management division of investment firm Baird.

In a classic sense, de-risking involves scaling back on stocks and moving into less-volatile instruments, such as bonds and cash.

Some strategists, including Liz Thomas, head of investment strategy at SoFi, don't think market conditions warrant that right now, and you might agree. Similarly, thirty-something investors, who don't need to tap their retirement savings for decades, and investors who are already conservatively positioned may not need to de-risk.

In those cases, staying the course may be the better tack — and actually avoids the risk of not meeting your goals by investing too conservatively for long-term success.

But other situations present good opportunities to shore up your portfolio by making appropriate tweaks.

We'll review some de-risking strategies for several circumstances, including temporary hurdles (your job is in jeopardy or you're nearing retirement), more lasting ones (such as a change in your comfort level with risk), and other situations.

The first steps to de-risk your portfolio

Consider some best practices in your quest for a safer portfolio. It's important to remember that de-risking doesn't mean upending your current investment plan or selling everything and moving to cash. Rather, it's about finding ways to tame the risk in your portfolio without dramatically shifting the allocation of your investments.

In some cases, no selling may be required; you simply invest any new money you're putting in the market "a little differently," says Baird's Steffen.

Start with a review of your portfolio. You should have an investment plan already in place — one centered on a diversified portfolio that holds a mix of foreign and U.S. stocks, bonds and cash and that is aligned with your time horizon and your risk tolerance.

These days, after three good stock-market years, your portfolio might be more aggressively positioned than you'd prefer. A simple rebalancing — selling securities that have done well and buying pockets of the market that have underperformed — could be enough to lower the risk level of your portfolio. And "now is a good time to lock in some gains," says Baird's Steffen.

Next, identify any life changes or worries that may be keeping you up at night. If your cash needs, investment goals, risk tolerance or time horizon have become more challenging, some de-risking might be in order.

"Scale any shifts you make in your portfolio to the scale of the risk involved," says David Kressner, a managing adviser at Altfest Personal Wealth Management in New York City.

Finally, you may want to assess how any portfolio tweaks you're considering may affect your chances of achieving your investment goals. That’s what Cassandra Rupp, a senior wealth adviser at Vanguard, does before making any moves in her clients' portfolios.

Rupp stress tests the new portfolio in a Monte Carlo simulation, which runs through hundreds of possible market scenarios to find out how it might perform and, most importantly, how likely the altered portfolio will be to accomplish the client's investment objective.

"So, it's not just about how we might be revising the investments," says Rupp. "It's also revisiting the success rate of the new long-term plan."

Read on for ways to de-risk your portfolio in five different scenarios, including investments to consider. All returns and data are through July 21, unless noted otherwise.

Scenario 1: You're worried about a stock market bubble.

If a bubble in artificial-intelligence-related stocks concerns you, you're probably overinvested in them, says Baird's Steffen. Of course, these days, most of us are. The AI-stock-heavy tech and communications services sectors combined currently make up nearly half of the S&P 500 Index.

Diversification is the name of the game in this scenario. "Rarely does a bubble affect all things in a uniform type of way," says Kressner. For instance, in the early 2000s, when the dot-com bubble burst, a well-diversified portfolio, with exposure to non-tech sectors, small-company shares and foreign stocks, weathered the downturn well, he says.

Beef up your stakes in non-tech parts of the market with an aim to lower your tech exposure to about 25% of your overall stock portfolio.

"This is a good time to spread your money out," says Lewis Altfest, chief investment officer at Altfest Personal Wealth Management. "Tech stock valuations are kind of rich right now. And I think other parts of the market are going to do better than technology, or at least keep up with it, and with less risk," Altfest says.

Non-tech sectors to consider include health care and consumer staples, where investors are currently "underexposed," says SoFi's Thomas.

Our favorite diversified health care fund is the Fidelity Select Health Care Portfolio (FSPHX), a member of the Kiplinger 25, the list of our favorite no-load mutual funds. Manager Eddie Yoon has outpaced his competition over the past three, 10 and 15 years.

The Vanguard Consumer Staples Index (VCSAX) and its exchange-traded-fund twin that trades under the symbol VDC both charge just 0.09% in annual expenses and boast three-, five- and 10-year annualized records that rank among the top decile of consumer staples funds.

Alternatively, an equal-weighted index fund, such as the Invesco S&P 500 Equal Weight ETF (RSP), can lessen overconcentration in huge tech stocks because it holds every component in the S&P 500 in equal proportion.

Or buy funds that focus on midsize and small-cap stocks. Small caps will benefit from continued interest rate cuts; mid-cap stocks are ripe pickings for all those mergers and acquisitions deals that many expect to pick up in pace this year.

The iShares Core S&P Mid-Cap ETF (IJH) and the iShares Core S&P Small-Cap ETF (IJR) are members of the Kiplinger ETF 20, the list of our favorite exchange-traded funds, as is the aforementioned Invesco S&P 500 Equal Weight fund.

Tilting toward large-company value strategies is another way to diversify. You'd be surprised to learn, however, that many large-value funds count Nvidia (NVDA), Apple (AAPL) and Microsoft (MSFT) among their top holdings. Two that don't: Vanguard Equity Income (VEIPX) and Dodge & Cox Stock (DODGX). Both funds are members of the Kiplinger 25.

Index-fund lovers might consider Vanguard Value Index (VVIAX), which also trades as an ETF under the symbol VTV.

Explore abroad. Despite a solid performance in 2025, foreign stocks still trade at bargain prices relative to U.S. shares on multiple measures.

The Vanguard Total International Stock ETF (VXUS) tracks an index that includes nearly every publicly traded foreign stock in developed and emerging countries. The fund has climbed 25% over the past 12 months.

Altfest favors international value-oriented stock strategies these days. One such fund that catches our eye: the iShares Edge MSCI International Value Factor ETF (IVLU), which tracks an index of foreign large and midsize companies that trade at low valuations. Over the past 12 months, the fund has gained 34%. Its 10-year annualized return, 11.2%, isn't shabby, either. Both trailing returns outpace the MSCI EAFE Index of stocks in developed foreign markets.

Scenario 2: Your job is insecure.

Layoff fears are high these days, according to a recent survey by Zety, a website that helps job seekers write résumés and cover letters. But if you're laid off, unless you’re close to retirement age, you'll likely find work again.

So the best de-risking strategy — before the pink slip arrives — is to leave your portfolio allocation alone but focus on having enough cash to cover your costs while you're looking for new employment.

Build an emergency fund that covers at least three to six months of essential expenses — rent or mortgage, car payments, gas, food, health care costs, insurance and utilities. Planning for enough to cover just the basics, of course, means fewer dinners out and other such treats while you're looking for a new job.

If denying those pleasures is a downer to you, then you may need to pad your emergency fund more, says Jonathan Lee, a wealth management adviser at U.S. Bank. And bear in mind, depending on your work experience, income level and how niche-y your skill set is, it may take you longer to find a job than someone in the early stages of their career.

In that case, a six-month emergency fund makes more sense than one that covers just three months.

You should consider family income dynamics when deciding how much to save in your emergency fund, too. If you're single or your family pulls in two fairly equal salaries, then a three-month fund may be sufficient. But if household income is lopsided or you rely on one income (or you and your partner work at the same place or in the same field), an emergency fund that covers closer to six months is a good goal, says U.S. Bank's Lee.

Finally, factor in psychology. For nervous Nellies, a six-month emergency fund can make sense regardless of job experience or family dynamics. Setting aside cash over a year or even two years is a reasonable goal by balancing saving for your retirement and an emergency fund at the same time.

If you're already out of work and have no emergency fund, you may have to tap other resources, such as a home-equity line of credit, if you have one.

If you must sell investments, tee up assets in a taxable account first, both to avoid an early withdrawal tax penalty if you're younger than 59½ (you can make penalty-free withdrawals of contributions from a Roth account) and to keep your tax-deferred assets growing. Aim to keep your overall allocation in place by selling proportionately across your portfolio so that your long-term investment plan remains unchanged.

Keep your emergency stash in an interest-bearing account that beats inflation (running about 3.5%). "You may not need to rely on it for years, but over the course of time, inflation can seep into your ability to afford your lifestyle as you know it," says Lee.

At last report, top yields for both high-yield savings accounts and money market bank accounts were at or above 4%. Among money market mutual funds, the Vanguard Federal Money Market Fund (VMFXX), the second-largest in the country by assets, offered 3.6%; the biggest money market mutual fund, the Fidelity Government Money Market Fund (SPAXX), paid 3.3%.

Scenario 3: You've entered the retirement danger zone.

The five years before and after you retire, a period known as the retirement danger zone, is a critical time in your investing life. A major market downturn during that stretch could shrink your portfolio just when you need to start pulling from it.

Over time, that can negatively impact your ability to outlast your nest egg. "It's called the sequence-of-returns risk," says U.S. Bank's Lee. We're living longer, too, which adds to the danger.

The best way to protect yourself against a sequence-of-returns risk is to make sure you've got enough cash on hand to cover two to three years' worth of expenses in retirement, after accounting for income from other sources, such as Social Security or a pension.

Consider putting aside enough for necessary expenses, as well as fun money, says Lee. Extremely risk-averse investors might consider holding up to five years of expenses, but three years is a good middle ground. The goal is to buy enough time to ride out a tough market, should one come along, so you aren't forced to sell investments in a down market.

Ready cash means money that's easily accessible in a high-yield savings account, money market bank account or a money market mutual fund, all of which yield roughly 3.0% to 4.0%, nationwide, at last report.

You can use this Bankrate tool to find and compare savings options fast:

Investors in the retirement danger zone should consider de-risking the medium-term portion of their investment portfolio, too. In a "bucket" approach to retirement-portfolio construction, that means holding the bucket of money you expect to tap roughly four to 10 years from now in a combination of cash and high-quality bonds and bond funds.

Our favorite actively managed intermediate-term bond funds include Baird Aggregate Bond (BAGSX), which currently yields 4.2%; Fidelity Investment Grade Bond (FBNDX), which yields 4.5%; and the Vanguard Core Bond ETF (VCRB), 4.9%.

An intermediate-term government fund we like is Vanguard Intermediate Term Treasury (VFITX), which is actively managed and yields 4.2%.

For now, short-term bond funds still offer good yields. Consider these stand-out short-term bond funds: iShares Short Duration Bond Active (NEAR), which yields 4.5% — it's a member of the Kip ETF 20 — and Vanguard Short-Term Federal (VSGBX), which currently yields 4.1%.

Lee says a small stock allocation in the medium-term bucket is not out of order, as long as the stocks are high-quality, well-established, large-cap stocks from the U.S. or developed foreign countries. "These stocks will grow over time, but they aren't all the way out on the risk spectrum," he says.

To add high-quality companies to your portfolio, take a look at these two funds. The Pacer US Cash Cows 100 ETF (COWZ) focuses on large companies with the highest free-cash-flow yield. That's free cash flow (money left over after operating expenses and spending to maintain or upgrade property and equipment) relative to a company's market value.

The fund has returned 10.5% annualized over the past five years. Notably, it gained 0.2% in 2022, a year when the S&P 500 lost 18.1%. The JPMorgan U.S. Quality Factor ETF (JQUA) turned in a solid 13.2% five-year annualized return with below-average volatility. It tracks an index that sifts for companies that meet 10 quality-oriented criteria, including measures of profitability, financial risk and earnings quality.

For exposure to high-quality foreign stocks, consider the Invesco S&P International Developed Quality ETF (IDHQ), an index fund that homes in on three fundamental ratios: return on equity (a profitability measure), accruals ratio (an earnings-quality measure) and financial-leverage ratio (a measure of financial stability and solvency). Or consider a foreign dividend-stock fund — such funds tend to offer smoother rides.

Kiplinger 25 member Janus Henderson Global Equity Income (HFQTX) sports below-average volatility and has generated a robust 6.2% yield over the past 12 months.

Ideally, you'd be making de-risking moves in a tax-sheltered account, says Christine Benz, director of financial planning and retirement at Morningstar. "But if you're still working and contributing to those retirement accounts, think about channeling your new contributions to those safer holdings as a way to move up your allocation there," she says.

Scenario 4: Your risk tolerance is lower than you think.

It happens: You thought you could withstand a bear-market drop in your portfolio, but now you're not comfortable with it. The early 2025 tariff tantrum, when the S&P 500 dropped 19% in less than seven weeks, was a wake-up call for many investors.

If your ability to withstand stock market losses has changed, there are ways to maintain exposure to equities but pare down the volatility, or even limit potential losses — you just may have to give up some potential gains.

Defensive sectors, such as consumer staples and utility stocks, tend to be steady Eddies, in part because many sport robust dividends that can cushion any losses (or shore up slim returns).

Over the past decade, for instance, shares in companies that sell essential daily household products have been nearly 20% less volatile than the broad market. The aforementioned Vanguard Consumer Staples ETF (VDC) ranks among the top 8% of all consumer staples funds over the past three years. Utilities, meanwhile, are a classic defensive play. Consider the Invesco S&P 500 Equal Weight Utilities ETF (RSPU).

Focusing on more stable stocks may be a good move this year, says SoFi's Thomas, because it's a midterm election year, and those tend to be more volatile.

A buffered ETF uses options tied to a specific index to cushion losses to a predetermined degree in exchange for a cap on potential gains.

Buffered ETFs require some timing when you buy, because the options are set to cover a specific stretch — 12 months, for example — so optimally, you'll get in at the start of the period. Once purchased, however, they can be held indefinitely, because they roll over to a new 12-month stretch.

Buy shares in the Innovator U.S. Equity Power Buffer ETF September Series (PSEP) in late August, for instance. It protects you against the first 15% in losses in the S&P 500 between the start of September 2026 and the end of August 2027.

The cap on gains changes from one-year period to one-year period and had not been set yet at press time. The fund's cap on gains over the past 12-month period that ends in August 2026 is 10.9%, net of fees.

These funds come in many iterations. Some are tied to the performance of other indexes, including the Nasdaq Composite, as well as benchmarks for small-company stocks, emerging and developed foreign stocks, and even bonds. The reset period, also known as the outcome period, varies, too. Some buffered funds reset over three months, six months or two years, for example.

The Innovator Defined Wealth Shield ETF (BALT) offers protection against a 20% drop in the S&P 500 every three months. In its most recent quarterly stretch, which ended in June, the fund’s three-month cap on gains was 2.4% (which implies an annualized cap of nearly 10% over 12 months). With its hefty buffer on losses, this fund tends to behave more like a bond investment.

Scenario 5: You fear a recession ahead.

Most economists expect slower growth but no recession in 2026. But just the fear of a recession can affect the stock market, whether one actually occurs or not, says Jim Paulsen, a former Wall Street strategist who writes the newsletter Paulsen Perspectives.

In turn, a calamity in the market could dent what’s known as the "wealth effect," causing investors to cut back on spending and delivering a blow to the economy.

Diversification is your first line of defense in a recession. Make sure your investments are appropriately spread across sectors, company size, geography and even investment style (value and growth).

A Wells Fargo Investment Institute study shows that a portfolio with a wide mix of investments outperformed the S&P 500 by an average of seven percentage points over the past several recessions.

Retune your portfolio so it's more defensive. A defensive portfolio — one that's always positioned for an economic downturn — can allow you to maintain an appropriate mix of stocks, bonds and cash, but tilting toward more conservative selections within those asset classes may provide a smoother ride, which can help investors stay the course, says Frank Maltais, a certified financial planner at Fidelity in Portland, Maine.

On the stock side, load up on high-quality names that are less economically sensitive, are low in volatility and pay dividends. In addition to funds we've already named, such as Fidelity Select Health Care, Vanguard Equity Income, Invesco S&P 500 Equal Weight Utilities and Vanguard Equity Income, we also like Capital Group Dividend Value (CGDV), which invests in stocks of established U.S. firms that generate above-average dividend yield (greater than the S&P 500).

Over the past three years, it has returned 22.7% annualized, beating 97% of its peers (large-value funds), with volatility that was a touch below average.

Go high-quality on the bond side, too, and hold short-and intermediate-term Treasuries, which offer ballast in stock-market downturns, as well as government-guaranteed mortgage bonds. You can buy Treasuries directly from the government at Treasury Direct.gov and hold to maturity.

Among funds, the iShares U.S. Treasury Bond ETF (GOVT) holds debt with short-, medium-and long-term maturities and yields 4.3%. More than 55% of the portfolio is invested in bonds that mature in one to five years. Target the short end of the yield curve with the iShares 1-3Year Treasury Bond ETF (SHY), which yields 3.9%.

If you want to tilt more toward medium-maturity debt, the previously mentioned Vanguard Intermediate-Term Treasury (VFITX) holds a mix of bonds that mature in three to seven years. Our favorite mortgage-bond funds include the index-based Vanguard Mortgage-Backed Securities ETF (VMBS), which yields 4.2%, and the actively managed fund Vanguard GNMA (VFIIX), which yields 3.6%.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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In today's unpredictable economic climate, finding a safe yet profitable place for your hard-earned money is more critical than ever. Two smart, but overlooked savings solutions are money market accounts (MMAs) and no-penalty CDs.

Both accounts share similarities as you earn an APY currently outpacing inflation. You'll have access to your money when you need it. Both also serve different purposes and come with tradeoffs.

The question comes down to preferences: Do you want access to your money immediately, or do you prefer to lock in a fixed rate and let it ride for a bit? I'll break down the pros and tradeoffs of each approach.

Money market accounts: Where liquidity meets strong returns

If you're concerned about tying up your money and need immediate liquidity for expenses, a money market account is a better solution. MMAs offer the returns of a high-yield savings account with the purchase abilities of a checking account.

Many money market accounts come with debit cards, and some offer check-writing capabilities. In turn, you can access your funds whenever you need them in an emergency or an unplanned expense.

Use this Bankrate tool to shop and compare rates on the top options:

Money market accounts come with some limitations

Money market accounts do have some things you'll need to consider. One, some banks require you to carry an average daily balance of a specified amount, or you could face a monthly fee.

Another is that some banks still restrict how many transactions you can make with an MMA, especially if you plan to use your debit card often. Find one that doesn't impose transaction limits, or you might find the account too limited for your purposes.

Finally, money market accounts feature variable interest rates. It means they can change at any time if the Federal Reserve cuts rates in the future or your bank decides to lower them. If this is concerning, there's another option that protects you from these variances.

No-penalty CDs: Lock in a higher rate for short-term goals

This is where a no-penalty CD can come in handy. Unlike money market or high-yield savings accounts, a CD offers a fixed interest rate. It means once you open an account, your rate remains the same through the term.

No-penalty CDs also differ from regular CDs in that you can withdraw cash when you need it. Most banks require you to hold the funds in the account for the first week or month before you can withdraw.

With rates as high as 4.00% APY, you can maximize your cash without fear of having to tie it up long-term. Use this Bankrate tool to compare and find the best CD options for your needs:

No-penalty CDs come with a few tradeoffs

A few things to note about no-penalty CDs: If you need to withdraw money, some banks will close your CD. While you won't have any early termination fees, you won't earn any interest, either, reducing your earning potential.

Your maturity window will also be shorter. Most banks offer these CDs in terms ranging from six months to a year. If you want to re-invest your cash after the maturity date, there's no guarantee you'll receive the same rate.

Unlike a money market account, you won't be able to add more money to it. It makes a no-penalty CD a more suitable option if you have a specific savings goal in mind with the cash on hand.

Finding the right savings option for your needs

The good news is that whichever option you choose, you'll gain a few benefits you won't find in the stock market. You'll earn a guaranteed return — as high as 4.00% APY for both options. If you choose an account with FDIC Insurance, it'll protect your assets up to $250,000 per account holder.

The key is knowing when to use each. To help, here are a few scenarios and recommended strategies based on priorities:

Ultimately, both options are wise ways to grow your cash safely with the flexibility to pivot if inflation continues to rise. Choosing between them comes down to your personal preferences, whether you have an emergency fund established and your cash flow.

Related content

• Best Money Market Accounts
• Do You Have a CD Maturing Soon? Here's What to Do Next
• Best No-Penalty CD Rates: Lock in Rates at 4%

One of the biggest challenges facing younger generations today is preparing for retirement in an increasingly uncertain world. Encouraging Americans to begin saving and investing early is one of the most effective ways to build long-term financial security.

One proposal that has recently generated discussion is the concept of the "Trump account." The idea behind the account is simple but powerful: Provide young Americans with an investment account early in life so they can benefit from decades of compounded growth before retirement.

Encouraging Americans to begin saving early is a strong step in the right direction. However, there may be an opportunity to improve the concept even further by adopting a model that takes advantage of the tax-free power of a Roth-style retirement account.

What is a Trump account?

A Trump account is designed as a government-supported investment account for young Americans, created with the purpose of encouraging long-term wealth accumulation starting at birth or early childhood.

Under the proposal, a child would receive an initial contribution from the government or another source to start the account. Family members could then continue contributing additional funds each year as the child grows up. These funds would be invested and allowed to grow over time.

Once the individual reaches adulthood, the account would typically transition into a traditional retirement savings structure, often through a rollover into an IRA.

The ultimate objective is to help young Americans begin saving for retirement decades before they would normally start contributing to a retirement account.

How Trump accounts work

Under the proposed structure, a Trump account would be a special investment account created for children under the age of 18. The rules are designed so the account functions primarily as a long-term savings vehicle rather than a general spending account.

One of the most notable features of the program is a proposed $1,000 starter contribution for children born between 2025 and 2028. This initial deposit is intended to jump-start savings and demonstrate the potential benefits of long-term investing.

In addition to the government contribution, parents, relatives or other individuals may contribute up to $5,000 per year per child, with the limit expected to be indexed for inflation. In some cases, employers may also contribute up to $2,500 annually, which counts toward the overall contribution limit.

During the child's early years, the funds would generally be invested in diversified U.S. stock index funds designed to encourage long-term investing and reduce speculative risk.

Trump accounts are structured as tax-deferred investment accounts, meaning investment gains grow without being taxed each year. However, because the account would eventually transition into a traditional retirement account structure, withdrawals later in life would generally be taxed as ordinary income.

The power of compounding

One of the most compelling aspects of the Trump account concept is the potential impact of long-term compounding.

Consider a simple example. Suppose a child receives a $1,000 initial contribution and family members contribute $3,000 each year until the child turns 18. Assuming an average annual return of 8%, the account could grow to roughly $110,000 by age 18.

If that balance were simply left invested and continued compounding at the same rate without any additional contributions, it could grow to nearly $3 million by age 60.

These kinds of long investment timelines demonstrate how even relatively modest contributions made early in life can grow into significant retirement wealth.

A potentially better structure: The Roth IRA model

While Trump accounts represent a promising idea, there is another retirement structure that could offer even greater long-term benefits: The Roth IRA.

A Roth IRA operates under a different tax model than traditional retirement accounts. Contributions are made with after-tax dollars, but once the money is inside the account, investment growth is tax-free and qualified withdrawals are also tax-free.

If the account owner waits until age 59½ and the account has been open at least five years, all distributions, including investment gains, can be withdrawn without paying any taxes.

This structure can be particularly powerful when investments have decades to grow.

Why Roth accounts could be even more powerful

If a Roth-style structure were used for early-life investing, the long-term benefits could be substantial.

Under the Trump account structure, withdrawals in retirement would generally be taxed as ordinary income. Under a Roth model, however, the millions of dollars generated through decades of compounded growth could potentially be withdrawn completely tax-free.

Roth accounts also offer greater flexibility. Investors can typically choose from a wide range of investment options, including stocks, exchange-traded funds and mutual funds.

In addition, Roth contributions can generally be withdrawn tax- and penalty-free if needed because the original contributions were already taxed.

This flexibility can be valuable for major life events such as purchasing a home, covering education expenses or handling financial emergencies.

A simple policy improvement

The primary reason Roth IRAs are not commonly used for young children is the earned income requirement. In order to contribute to a Roth IRA, an individual must have earned income. Most children and teenagers do not meet this requirement, which limits the ability to begin investing very early in life.

One potential improvement would be to allow Roth-style retirement contributions for individuals between ages one and 18 without requiring earned income. Such a policy could include higher annual contribution limits, eliminate the earned income requirement for minors and simply transition into standard Roth IRA rules once the individual reaches adulthood.

This approach would allow young Americans to benefit from tax-free retirement wealth while still encouraging early saving and investing.

Final thoughts

The Trump account concept represents a meaningful step toward improving financial security for future generations. By encouraging young Americans to begin investing early, the program highlights the extraordinary power of long-term compounding and reinforces the importance of retirement planning.

However, the concept could potentially be strengthened even further by adopting a Roth-style structure that allows long-term investment growth to be withdrawn completely tax-free.

Whether through Trump accounts, Roth IRAs or a hybrid approach that incorporates elements of both, the underlying lesson remains the same: Starting to invest early and allowing compounding returns to work over time is one of the most powerful ways to build long-term wealth.

Related Content

• Should You Start a 'Trump Account' for Your Child?
• How to Open Your Kid's $1,000 Trump Account
• Trump's New Retirement Plan: What You Need to Know
• Could Trump Accounts be the Best College Savings Option?
• How Alternative Assets Are Reshaping the IRA: The Rise of Self-Directed Retirement Investing

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

If you're retired or a few years away from it, you're likely considering reallocating some of your assets to less volatile options to reduce risk. Fortunately, savings accounts still offer strong returns that surpass inflation and help achieve your goals during retirement.

If you decide to transfer some money, your next step is to choose the right savings account. Various options suit different needs, from having immediate access to cash to a hands-off account that earns a fixed rate of return, regardless of Federal Reserve policies and interest rates.

To help you find the best fit, I've included several scenarios and the top options for each. Using this guide can help you find a savings account that supports your goals.

1. I want access to my cash all the time

If this is the case, you have two options: A high-yield savings account (HYSA) or a money market account. Which one is better for you? Let's break it down:

A high-yield savings account will be a smarter fit if you don't need access to your cash immediately. It works best for savers who have a dedicated emergency fund for unplanned withdrawals with another account.

The reason? Online banks offer the best rates on high-yield savings accounts, yet some of them don't offer ATM cards. That means that unless you open a checking account with the same bank, it might take a few business days to receive your money via an ACH transfer.

If you don't mind the waiting, use this Bankrate tool to find the best account for you:

Meanwhile, a money market account is best if you need occasional immediate liquidity. Money market accounts come with debit cards and check-writing privileges, making it more of a hybrid savings/checking account.

Two things to consider with money market accounts are that you won't earn as high a return as you would with HYSAs, and some banks limit the debit card transactions you can make on money market accounts monthly, so pay close attention to the terms if you go this route.

2. I'm saving my money for a specific goal

In this scenario, a certificate of deposit (CD) is a smart option. The key with CDs is finding a term that matches your savings goals. To demonstrate, if you want to start a business next year after you retire, earmarking funds in a one-year CD is a smart way to ensure you're ready to hit the ground running.

The nice thing about CDs is that they encourage you to keep your money in for the full term. If you need to break it open, you can do so, but the early termination fee will eat away at your earnings.

You can shop and find the best CD rates for your needs using this Bankrate tool:

The one thing I caution about long-term CDs is that if inflation continues to rise, it will limit your earnings. Case in point: The Iran war spiked fuel prices, which means the cost of everyday goods will also increase. A prolonged war could result in even higher fuel costs, driving up other prices and inflation further.

3. I have a large deposit and want to split it among savings accounts

For savers with deposits of $100,000 or higher, I'll always recommend exploring jumbo CDs first. They provide the highest returns among all savings options, with APYs reaching up to 4.35%. They also don't have long-term maturity dates; usually, you're looking at a commitment of six months to a year.

This makes them a flexible savings choice if you want to maximize your returns with some of your funds. However, if you need to split your deposit across multiple savings accounts for cash accessibility, there are several strategies you can use.

For example, with a $100,000 deposit, you could find a jumbo CD that only requires $50,000, placing half into that and the other half into a high-yield savings account. This method allows you to take advantage of two of the highest APYs available while maintaining liquidity and protecting some of your money from potential rate cuts.

Another option is a CD ladder. How this works is you open multiple CDs with different maturity dates, so you have cash flow while protecting your money from future rate cuts.

Ideally, you'll want a mix of short-term and long-term CDs. That way, you have cash access if you want to pivot to other investments in the future, while some of your money continues to earn higher rates.

4. I don't want to use online banks

Your comfort should matter most when choosing a savings account. You want peace of mind knowing you have access to your money when you need it, or if you're caring for an aging parent, having access to a personal banker can make all the difference with financial planning.

Going with this approach means you won't likely earn rates as high as you would with online banks. However, many regular banks, such as Bank of America, U.S. Bank and Chase, offer relationship banking — if you have enough money deposited with them (think $10,000 to $100,000), you'll access higher returns on savings accounts.

If you don't have that much to deposit, it doesn't mean you won't have options either. Instead, look for promotional rates on CDs and savings accounts, as banks offer higher rates on them, so you can still earn a healthy return.

There are many avenues when choosing the right savings account for your needs. Start by prioritizing what you're looking for out of a savings account, then find a solution that fits best within that framework. Doing so puts you on the road to maximizing cash without the risk.

Related content

• Where to Store Your Cash in 2026
• Best High-Yield Savings Accounts
• Jumbo CD vs High-Yield Savings: Which is the Best Place to Store $100k?
• Best CD Rates — A Risk-Free Way to Save

Question: I'm retiring in a few years and want to reallocate $100,000 to a less risky investment. Which savings account would work best for me?

Answer: The first thing you should consider is inflation. With gas prices rising and food prices doing the same, the smart aim is to find a savings account earning above 4.00% APY.

Luckily, several solutions keep you ahead of inflation while earning thousands of dollars annually. Two of the most popular choices are jumbo CDs and high-yield savings accounts (HYSA). Which one would work best for you? I'll break down when to use each and which one earns you the most cash.

A flexible option that keeps your cash accessible

The first factor you should consider is whether you'll need access to any of the $100,000 within the next year. If you do or want the flexibility to reinvest in something else in a few months, I recommend a high-yield savings account.

What I like about them is that you can earn healthy rates of up to 4.20% APY with online banks with no fees. This allows you to maximize your cash in a quick window. You'll also receive FDIC insurance with many banks, protecting your investment up to the first $250,000 deposited per account holder.

Here's my recommendation:

Why now: The Iran War increased gas prices by 20%, so it's safe to say the cost of everyday goods will rise. David Payne of the Kiplinger Letter notes that if there is no Iranian ceasefire, expect inflation to end the year around 4.0%.

This is why Newtek Bank's savings account is a smart move, because it will keep you ahead of rising costs.

A commitment worth sizable gains

Another option to consider is a jumbo CD. It has many of the same rules as a regular CD, in that you can't withdraw your deposit before the maturity date, unless you want to pay an early-termination fee amounting to a few months of earned interest.

Moreover, as its name implies, jumbo CDs are reserved for larger deposits — think $50,000 to $100,000 minimums. The good news for investors is that these CDs have quicker maturity (terms range from six months to one year), making them a good short-term strategy if you want to reallocate some retirement funds to less risky ventures.

Use this Bankrate tool to compare and find the best CD options for you:

Why now: With inflation high, rate cuts are likely off the table for the rest of the year. In fact, if inflation continues to rise and remain sticky, there's growing momentum that the Fed could hike rates at least once by the end of the year.

Rate hikes can lead to higher savings rates. So, choosing a short-term option now might put you in prime position to capitalize on even higher rates when your CD matures.

Which savings account earns me more?

Here's how much you can earn with each savings option if you deposit $100,000:

Using this example, a jumbo CD will earn the most money over time. It's also the ideal option if you don't have cash flow issues, as it features a fixed interest rate, allowing you to maintain higher earnings even with inflation rising.

However, the earnings difference isn't substantial. Either way, you're earning thousands effortlessly in a year with access to your cash. Therefore, your cash liquidity and short-term goals should direct the course to help you choose the best option for your needs.

Related content

• Best High-Yield Savings Accounts
• Where to Store Your Cash
• See Our Best Jumbo CD Rates
• Do You Have a CD Maturing Soon? Here's What to Do Next

Tax season often brings a familiar ritual: filing your return and waiting to see how big your refund will be. For many households, that refund can feel like a financial bonus arriving just as spring expenses begin to pile up. According to the Internal Revenue Service (IRS), the average tax refund is currently $3,742.

But a large refund also means something else. You may have given the government an interest-free loan during the year.

Instead of sitting with the IRS, that same money could have been earning interest in a savings account, growing in an investment portfolio or helping you reduce debt. Even modest returns can add up when money stays in your own account throughout the year. While refunds can still serve a purpose for some taxpayers, it is worth understanding the opportunity cost.

Why tax refunds happen

Each year, the IRS issues hundreds of billions of dollars in tax refunds to U.S. taxpayers. Refunds typically happen for several reasons:

• Too much federal tax withholding from paychecks
• Estimated tax payments that exceeded actual tax liability
• Refundable tax credits, such as the Child Tax Credit or Earned Income Tax Credit
• Outdated W-4 forms that don't reflect a taxpayer's current situation

Changes like marriage, divorce or a new child may not be reflected in withholding adjustments when you file your taxes, which can impact your refund.

Many people also intentionally over-withhold because they want to avoid owing taxes when they file. Others treat their refund as a type of forced savings plan.

While that approach can help some households build a lump sum, it also means the money wasn't working for them during the year. So how much could that money actually earn if it stayed in your account during the year? The answer depends on where you keep it.

What your tax refund could earn in a high-yield savings account

High-yield savings accounts have offered higher interest rates in recent years than traditional bank accounts.

If the average $3,742 refund had instead been kept in a high-yield savings account earning 3% to 4% annually, it could have generated:

• About $112 in interest at 3%
• About $150 in interest at 4%

That may not sound like a huge amount, but it represents money earned simply by keeping the funds in your own account rather than sending them to the IRS through excess withholding.

High-yield savings accounts also offer flexibility. You can typically access the money anytime without penalties.

While rates are still elevated, use the tool below to explore and compare some of today's top savings account options:

What your tax refund could earn in a CD

Certificates of deposit (CDs) can sometimes offer higher yields than savings accounts, depending on the term. In exchange for locking your money away for a set period, banks and credit unions may offer a slightly higher interest rate than a typical savings account.

Below is an example of what a $3,742 tax refund could earn in CDs with different terms using rates from several top CD accounts Kiplinger has reviewed.

CDs typically require you to keep the money invested for the full term. Withdrawing funds early can trigger penalties, which often equal several months of interest. For savers who are comfortable locking up their money for a fixed period, however, CDs can offer predictable returns and protection from market volatility.

What your tax return could earn in the stock market

The opportunity cost becomes more noticeable over longer periods. Historically, the S&P 500 has averaged roughly 10% annual returns over the long term, though results vary significantly year to year and returns are never guaranteed.

If that same $3,742 had been invested instead of withheld, the potential growth could look something like this:

• 1 year: about $374 in growth
• 5 years: about $2,283 in growth
• 10 years: about $5,963 in growth

This example illustrates how even relatively small amounts can grow significantly over time through compounding.

Of course, stock market investing involves risk and short-term returns can fluctuate widely.

How to avoid overpaying taxes during the year

Taxpayers who want to keep more money in their pockets during the year can take a few steps to better align withholding with their actual tax bill.

• Review your W-4. Updating your W-4 allows you to adjust how much tax is withheld from each paycheck.
• Use the IRS withholding estimator. The IRS provides an online calculator that can help determine whether your withholding is on track.
• Adjust withholding after major life changes. Marriage, children, new jobs or side income can all affect your tax situation.
• Check withholding mid-year. Reviewing your tax situation halfway through the year can help prevent surprises.
• Work with a tax professional if income varies. Self-employed workers or freelancers may need more customized withholding or estimated tax planning.

When a tax refund might still make sense

Despite the opportunity cost, a refund isn't always a bad outcome. In some cases, refunds are unavoidable or even beneficial.

For example, refundable tax credits may generate a refund regardless of withholding. Also, self-employed taxpayers sometimes overpay estimated taxes to avoid penalties and those with irregular income may prefer a buffer to ensure they don't underpay.

For households that struggle to save consistently, a refund can also function as a once-a-year financial reset, providing money to build an emergency fund, pay down debt or cover large expenses.

Still, understanding the potential earnings that refunds represent can help taxpayers make more intentional decisions about how much they send to the IRS throughout the year.

Related Content:

• 5 CDs to Put Your Tax Refund Into
• 10 Best High-Yield Savings Accounts to Grow Your Tax Refund
• What to Do With Your Tax Refund: 6 Ways to Bring Growth

Editor's note: This article is the second in a five-part series featuring the best advice about money from investing greats, renowned economists, top financial planners and other experts. Other articles focus on advice about managing money, retirement planning, family finance and the best advice experts have gotten from their moms and dads.

We asked a diverse group of 35 top financial experts — acclaimed investors, advisers, money managers, economists, influencers and more — to share their very best advice with Kiplinger readers. The essential question we put to them: Of all the many recommendations about money you've given or received, what are the best, most meaningful or most impactful tips you want to pass along?

In this article, the second in the series, we feature their advice about saving and investing. We hope you find their suggestions as smart and useful — and, occasionally, surprising, funny and moving — as we did.

The best saving advice

Reframe your thinking about saving and spending.

"We are a consumer culture, so most people don't even have the idea that one of the many things they can buy with their money is financial freedom. To them, saving for, say, retirement, feels like deprivation. The way I think about it, that is money I am spending to buy the thing that is most valuable to me, and that's my financial freedom. You simply have more options in life if you have financial resources."

—JL Collins, author of The Simple Path to Wealth

Pay yourself first.

"The best piece of personal finance advice ever is to pay yourself first. It's almost like an identity you need to embrace. It's essentially as soon as you get a dollar, rather than spending it, you decide to save and invest a percentage of that first. Ideally, this is a mind-set you learn as a child and instill in your own children early on, like when they get their first money as a birthday present. If you do this, you will be a multimillionaire. I don't care what job you have, how far you went in school. It is a slam dunk."

—Brad Klontz, cofounder of the Financial Psychology Institute and managing principal at Your Mental Wealth Advisors

Avoid lifestyle creep.

"People increase their lifestyle expenses too quickly, especially when they get raises. But if they're able to just keep their cost of living low while they increase their income, that is essentially the formula for financial success. You increase your income, keep your costs low, save the difference every year as you get raises, let compounding take over, and hopefully you should get to a very, very comfortable place in your life."

—Humphrey Yang, former financial adviser and current YouTube, TikTok and Instagram content creator

View saving as a way to buy yourself choices.

"I don't know when I'll retire, or if I'll retire, but I won't have much input into the decision, if I don't have savings. So, it's about growing that nest egg to give myself choices down the line. I'm planning for financial independence more than retirement, because we often underestimate how much we're going to change over time. We don't know if we'll still love our job in 10 years or if we'll want to do something completely different. Having savings gives you options to explore other possibilities."

—David Blanchett, head of retirement research for Prudential Financial

Create clear, defined financial goals.

"Visualizing your financial goals is very important. Take some time to develop clear, exciting visions for why you would deprive yourself of buying a luxury good, a nice meal out or that outfit you want right now, for why you're delaying your gratification. I've had people create vision boards of their financial goals, then determine what practical steps they were going to take to accomplish the goal, how much they would set aside each pay period for it and their exact timeline for realizing it."

—Brad Klontz

Related: 4 Psychological Tricks to Save More in 2026

Don't let debt deter you.

"The worst advice I've heard is: You shouldn't invest until you're debt free. But the reality is people have student loans and mortgages. And they still need to be saving and investing to build wealth. You can still put money in a Roth IRA or get the employer match in your 401(k), even if you've got $25,000 in student loans."

—Marguerita Cheng, certified financial planner and CEO of Blue Ocean Global Wealth

The best investing advice

Focus on what you can control.

"Manage what is within your control, and ignore things that are outside of your control. Flip on the TV, and what are they talking about? Venezuela, interest rates, Ukraine, midterm elections, nonfarm payrolls. Every single one of these things is totally outside of your control and can't be predicted. So what can you control? Your asset allocation, your financial plan, your costs. Be disciplined and manage your own behavior, and that will have an enormous impact on how your portfolio does over decades."

—Barry Ritholtz, cofounder, chair and CIO of Ritholtz Wealth Management

Do your homework.

"People are careful when they buy a refrigerator. They spend hours purchasing airline tickets. But they tend to put little work into purchasing common stocks. With all financial decisions, put effort in, take some time and be careful."

—Peter Lynch, vice chairman of Fidelity Management and Research; former manager of the Fidelity Magellan fund, generating a 29.2% average annual return during his tenure (1977–1990)

Related: Use This Stock Market Recipe for a Well-Diversified Portfolio

Protect yourself from yourself.

"When we see a downturn, especially as we near retirement or are already retired, it can be quite scary, and that fear gives us adrenaline, which makes us want to act. You need to rely on your rational self to overcome it. I always tell people that if you're going to rebalance your portfolio or diverge from your plan during the year, set a specific date in advance when you will always do this, and then, no matter what happens, wait until your day. I recommend choosing one at the end of February, when things are typically really boring. That way, if the market crashes on April 3, like it did in 2025 after steep tariffs were announced, you just remind yourself: I'll deal with this on February 27. You don't do something on April 4."

—Teresa Ghilarducci, labor economist and retirement security expert, professor at The New School for Social Research and author of How to Retire with Enough Money

Understand the elevator pitch.

"You should be able to explain to a 10-year-old in 30 seconds or less why you own a stock. If the company is too complex, move on to other options, as there are thousands of public companies."

—Peter Lynch

Never invest with a person.

"Limited partnerships were popular in the early 1980s. They offered great tax benefits. A friend got me to invest several thousand dollars in one managed by a friend of his, investing in Texas houses. But then tax laws changed in 1986, eliminating the tax benefits of limited partnerships, and the person managing the partnership turned out to be a cheat. It was a good lesson. I lost less than Bernie Madoff's investors, but the common lesson is the same and true: Never invest with a person."

—Meir Statman, finance professor at Santa Clara University and author of A Wealth of Well-Being: A Holistic Approach to Behavioral Finance

Keep it simple.

"My most valuable financial lesson came from Vanguard founder Jack Bogle, who taught me the virtue of keeping things simple. I've tried to take that to heart in terms of my own household's financial plan. I like to have a portfolio with very few moving parts, where you can easily identify where you do and don't have risk. And the simple building blocks, broad-market index funds, are often inexpensive to add to your portfolio. The typical worker has about 12 employers in their lifetime, so many of us are carrying around multiple retirement account plans. We can't get away from that complexity, so to the extent you can within those portfolios, be as minimalist as possible. It will keep you focused on what really matters: your asset allocation and your savings rate."

—Christine Benz, director of personal finance and retirement planning at Morningstar and author of How to Retire

Don't let monthly economic data rattle you.

"Resist the urge to overreact to monthly economic data. In general, it is a lot of noise and volatility. Take the numbers with a grain of salt, and don't react to the first data point that comes out. If it's a big change, you need to see another number. I am very big on looking at three-month averages instead." —Claudia Sahm, chief economist at New Century Advisors and former White House and Federal Reserve economist

Buy the world.

"You need to invest globally. A lot of people have all their money in the U.S. market and historically, that home-country bias of investing in just one market has been a horrible, no good, terrible idea."

—Meb Faber, CEO, Cambria Investments

Take the long view.

"Don't be anchored to the moment and make short-term decisions. Real money is made over time, and people have to tune out the noise and whatever the issue of the day is. Have conviction about why you see a different world. "

—Mellody Hobson, co-CEO and president, Ariel Investments

Related: The Stock Market Is Selling Off. Here's What Investors Should Do

Set realistic expectations.

"Define what success looks like in advance when you hire an adviser. If your definition of success is returns that beat the market, that's not something that anyone should be promising. There might be bad actors out there who will promise it, but nobody can guarantee beating the market all the time. If your expectations are unrealistic, you're more likely to make a behavioral error—to sell at the wrong time, buy at the wrong time or maybe fire your adviser at the wrong time."

—Peter Lazaroff, chief investment officer of Plancorp in St. Louis

Count on time, not timing.

"Investors can get tripped up focusing on short-term events and trends, thinking they have to time things just right rather than coming at investing from a long-term-planning perspective. Put together a thoughtful plan with a high probability of meeting your objectives, then stay disciplined as short-term trends and events happen. If your objectives and your circumstances haven't changed, and you stay the course, over time you have a higher probability of achieving your objectives."

—Mary Ellen Stanek, founder, managing director and chief investment officer emeritus, Baird Asset Management

Understand your odds.

"There is a cohort of short-term retail traders, born out of the pandemic and the rise of betting markets, who approach investing more like gambling and gaming. The way I think about the difference: Investing is owning; gambling is hoping. In investing, the odds are with you. As a long-term investor, the odds are that you are going to do well over time with compounding, with investing in high-quality companies and securities and being diversified. We know the odds are not with us when we gamble."

—Liz Ann Sonders, chief investment strategist, Charles Schwab & Co.

Let your goals guide you.

"Start with your goals. Once you are clear on what your goals are, what you're saving for, how much you need, and when you need it, it will be much easier to figure out how you should invest. It's a crucial step some people skip over as they move right into deciding: I want to own AI stocks or crypto or whatever. But the foundation for anything you do investing-wise should be what are your goals for your money.

Specificity is important too, because it will inform your time horizon, but also make the goals seem more important and valuable. You'll be less likely to override the decision and spend the money in the short term. So don't just say I want to retire someday, but really give some thought to what that will look like. Try to visualise what you're investing for."

—Christine Benz

Cast a wide net.

"If you look at 10 companies, you'll find one is overpriced and one is underpriced. If you look at 30 companies, three are overpriced and three are underpriced. If you look at 100, 10 are overpriced and 10 are underpriced. The person that turns over the most rocks wins the game."

—Peter Lynch

Don't take undue risks.

"It was really frustrating for me during the COVID period and subsequent years to see so many younger investors hyper-trading with high-risk zero-day options, prediction markets and crypto. Young people are 'time billionaires' with a long runway to compound returns. If you put aside a little money and invest it in the global stock market, average returns of 10% a year, by the time you are 70, you'll have $1 million. You don't even have to do anything; just don't touch it."

—Meb Faber

Don't believe market predictions.

"I have zero respect and nothing but disdain for every single person who makes any post on social media pretending that they can predict what's going to be happening in the stock market. I get shocked by the number of people with relatively high social status, who are well known in their field, who are trying to predict what's going to happen tomorrow, next week, next month, next year, next decade, with regard to something that is utterly unpredictable. Flipping a coin would probably be more accurate because at least that is unbiased. I hate this because people listen to these predictions and then use them to make investment decisions. These experts' words drive people to take action and it usually ends up hurting them."

—Brad Klontz

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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• Part 3: The Best Retirement Advice of All Time
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March is Women's History Month, a time to celebrate progress while also taking a clear look at areas where financial disparities still exist. One of those areas is savings.

Research consistently shows that women tend to be disciplined savers. They are often more likely to budget, build emergency funds and prioritize long-term security. Yet when researchers compare retirement accounts, investment portfolios and overall wealth, women's balances frequently fall behind men's.

This gap does not stem from a lack of financial responsibility. Instead, it reflects structural and behavioral factors that affect how money grows over time. Understanding those forces and knowing how to counter them can help women build stronger long-term financial security.

Why the gender savings gap still exists

Many studies show that women actively participate in saving and retirement planning. In fact, women often contribute to retirement plans at similar or even higher participation rates than men. Despite this consistency, average balances tend to be smaller.

Several structural factors help explain the gap:

• The gender pay gap means women typically earn less over their careers.
• Women tend to live longer, which requires larger savings to support longer retirements.
• Caregiving responsibilities often interrupt income and retirement contributions.

Each of these factors may seem manageable on its own. But over decades, they compound. Lower earnings mean smaller retirement contributions, while career interruptions reduce both savings and the investment growth that would have occurred during that time.

Even small differences in income or years worked can create significant differences in long-term balances.

The role of income and career breaks

Income plays a direct role in the ability to save. When earnings are lower, the amount available to invest naturally shrinks.

Women also step out of the workforce more frequently to care for children, aging parents or other family members. These career breaks affect finances in several ways:

• Retirement contributions pause during time away from work.
• Investment growth slows because money remains out of the market.
• Re-entering the workforce may involve lower wages or part-time work.

A few years away from the workforce can translate into tens of thousands of dollars in missed retirement contributions and compounded growth.

For example, someone who contributes $6,000 annually to a retirement account and earns an average 7% return could accumulate roughly $82,000 over ten years. Missing even a portion of that timeline can have a lasting effect on future balances.

The investing confidence gap

Another factor researchers frequently identify is the investing confidence gap. Even when women invest, many still question their own investing knowledge, and that uncertainty can affect how quickly they take action or how much risk they feel comfortable taking.

In the Charles Schwab Women Investors Survey, 89% of women said they feel very or somewhat confident in their overall investment strategy. Yet in the same report, far fewer identified knowledge as a personal investing strength; only 21% selected it. That disconnect can affect behavior, leading some women to delay investing or keep a larger share of savings in cash.

Research also shows that when women do invest, their results often match or exceed those of men. Women tend to trade less frequently, stay disciplined during market volatility and maintain long-term strategies.

Still, hesitation at the beginning can slow wealth accumulation. The earlier money enters the market, the more time it has to grow through compounding. Waiting five or even ten years to start investing can significantly reduce long-term returns.

Why this matters more than ever

As wealth patterns shift, the issue is becoming more significant. Financial researchers often refer to the coming decades as the largest wealth transfer in U.S. history. Trillions of dollars are expected to move from older generations to younger ones through inheritance, and a substantial share will ultimately pass to women.

Women also frequently become the primary financial decision-makers later in life due to widowhood and longer life expectancy.

These trends make financial literacy, investing confidence and long-term planning increasingly important for women’s financial security. Developing those skills now can help women manage and preserve wealth more effectively over time.

Strategies women can use to close the gap

While some factors contributing to the savings gap are systemic, women can still take practical steps to strengthen their financial position. Here are a few strategies to consider.

Start investing as early as possible. Time is one of the most powerful drivers of wealth. Even modest contributions can grow significantly over decades. Starting early allows compound growth to work more effectively.

Take full advantage of employer retirement plans. Employer-sponsored plans such as 401(k)s often include matching contributions. Failing to contribute enough to receive the full match means leaving free money on the table.

Increase contributions after career breaks. When returning to work after time away, increasing retirement contributions, even temporarily, can help offset lost savings years.

Consider professional guidance if needed. A financial adviser can help create an investment plan, clarify goals and provide accountability. For many people, professional guidance reduces uncertainty around investing decisions.

Automate savings and investing. Automatic transfers into retirement or brokerage accounts remove the need for constant decision-making. Automation turns saving into a routine rather than a recurring task.

Small changes can make a big difference

The savings gap between men and women did not develop overnight, and closing it will take time. But progress often begins with small, consistent actions.

Women already demonstrate strong saving habits. Pairing those habits with earlier investing, higher contribution rates and growing financial confidence can significantly improve long-term financial outcomes.

Over time, consistency matters more than perfection. Steady contributions and disciplined long-term investing can help women narrow the savings gap and build stronger financial security.

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Financial security rarely comes from hitting one magic number. Instead, it grows in layers, and for many households, the biggest source of money stress isn't just low savings. It's uncertainty.

When you don't know whether your savings are "enough," every unexpected expense can feel like a crisis waiting to happen. That's why financial experts increasingly recommend thinking about savings in tiers rather than aiming for one overwhelming goal. Each level of savings offers a different type of protection and peace of mind.

If you're trying to feel more financially secure this year, these three benchmarks can serve as a practical roadmap.

Financial anxiety often comes from uncertainty, not just lack of savings

Many Americans carry financial stress even when they're earning steady incomes. Without a clear sense of how much savings is sufficient, it's easy to feel like you're always falling behind.

Savings benchmarks provide clarity and momentum. Instead of viewing financial security as an all-or-nothing destination, tiered savings goals allow you to build confidence with each milestone you reach. Even modest savings can dramatically reduce reliance on credit cards, payday loans or last-minute borrowing.

Rather than asking, "Do I have enough saved?" a better question may be: "What level of protection have I built so far, and what's the next step?"

The first $1,000: Your crisis buffer

The first meaningful savings milestone is often the most powerful psychologically: a $1,000 emergency cushion.

This initial buffer is designed to cover small but urgent expenses such as:

• Car repairs
• Appliance replacements
• Medical copays
• Minor home maintenance

Without this cushion, even modest surprises can trigger credit card debt or short-term loans. Having $1,000 set aside can prevent a temporary expense from turning into a long-term financial setback.

It's also a relatively achievable goal. Saving $100 per month, for example, can build a $1,000 buffer in about 10 months. Tax refunds, bonuses or side-income windfalls can accelerate the process significantly.

Reaching this first milestone isn't about full financial security yet. Instead, it's about creating breathing room.

The $2,000 mark: Where financial stress starts to ease

Research conducted by Vanguard on financial well-being consistently shows that stress begins to decline once households accumulate a few thousand dollars in accessible savings.

Around the $2,000 level, many people report fewer day-to-day money worries and greater confidence handling unexpected expenses.

At this stage, savings can cover:

• Larger car or home repairs
• Higher medical bills
• Short income disruptions
• Insurance deductibles

This level acts as a bridge between surviving and stabilizing. You’re no longer operating paycheck-to-paycheck in the same way, and unexpected costs are less likely to derail your entire budget.

Just as important are the psychological benefits. Knowing you have a cushion can reduce financial anxiety and help you make more thoughtful decisions rather than reacting out of urgency.

Three to six months of expenses: True financial security

Once you've built a starter cushion, the long-term goal is typically a full emergency fund covering three to six months of essential expenses.

This level of savings is designed to protect against major disruptions such as:

• Job loss
• Extended illness
• Economic downturns
• Major life transitions

However, the right target varies by household.

Those who may want closer to six months of expenses saved include:

• Single-income households
• Freelancers or variable-income workers
• Retirees without steady income
• Homeowners with higher maintenance costs

Households with dual incomes, stable employment or strong support systems may feel comfortable with closer to three months.

The key is flexibility and doing what works best for you instead of focusing too heavily on rigid rules. Building a cushion that allows you to handle life’s uncertainties without panic will help you feel more financially secure.

Where to keep your savings so it actually works for you

Emergency savings should be easy to access when you need them. That means prioritizing liquidity over higher investment returns.

Common options include:

High-yield savings accounts: These accounts typically offer significantly higher interest rates than traditional savings accounts while keeping funds accessible.

Money market accounts: Often providing competitive rates and limited check-writing or debit access, money market accounts can be another flexible option for emergency funds.

Traditional savings accounts: While rates may be lower, they still offer simplicity and immediate access.

Whichever option you choose, focus on ensuring your savings are safe, accessible and separate from daily spending.

Use the tool below to compare some of today's top savings account offers, powered by Bankrate:

How to build savings in stages without feeling overwhelmed

Building savings can feel daunting, especially if your budget is tight. Breaking the process into manageable steps can make it more sustainable.

Start by automating contributions, even if they're small. Consistency matters more than the amount. Setting up an automatic transfer of $25 or $50 per paycheck can steadily grow your balance without requiring constant decision-making.

Use windfalls strategically. Tax refunds, bonuses and cash gifts can provide opportunities to make real progress toward savings goals.

Another approach is temporarily cutting or pausing one discretionary expense such as a subscription or dining out category, and redirecting those funds into savings until you reach your next milestone.

Over time, these incremental actions compound into stronger financial security.

When it makes sense to prioritize debt over savings

For households carrying high-interest debt, the choice between saving and paying down balances can feel complicated. In many cases, a hybrid approach works best.

Building a small emergency buffer, often $1,000, before aggressively tackling high-interest debt can prevent new borrowing when unexpected expenses arise. Once that buffer is in place, focusing on paying down costly debt can free up future cash flow for larger savings goals.

Avoid all-or-nothing thinking. You don't need a fully funded emergency account before addressing debt, and you don't need to be debt-free before saving. Progress on both fronts can happen simultaneously.

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It's common to feel like you're behind when it comes to building wealth, especially if you are measuring your progress against traditional age-based milestones. Many people have been taught to follow a set path: start saving for retirement in your twenties, invest a set percentage of your income in your thirties and increase contributions later in life.

In reality, financial lives rarely follow a straight line. Career changes, caregiving responsibilities, divorce, periods of unemployment or simply getting a later start can all shift your timeline. As a result, you may not be where you expected to be for your age.

That does not mean you are behind. It means you are in a different phase. When you focus on your current financial position instead of your birth year, you can build a plan that meets you where you are and helps you move forward at any stage of life.

The four phases of building wealth

Rather than focusing on wealth-building phases as defined by your age, this four-phase approach provides a broader overview to help you build wealth based on your progress. It is designed to meet you where you are financially and give you clear next steps, no matter when you start.

Stability: Build your financial foundation

During the stability phase, you focus on building a strong financial foundation that supports every phase that follows. As your finances become more stable, day-to-day stress often becomes easier to manage.

Prioritize these four goals during this stage:

• Build an emergency fund: Open a savings account that you’ll use only for your emergency fund and start building the fund until it includes three to six months of your living expenses. If that’s overwhelming, start with a smaller goal of building up $500 or $1,000 in savings, and then continue to build the fund from there.
• Debt paydown strategy: Work to pay down any existing debts, such as credit card, student loan and car loan debts. Pay off the debts with the highest interest first, then put the money you were paying on that account toward your debt with the next highest interest level.
• Develop consistent income and budgeting: Work to develop a consistent income, whether that’s through traditional employment or freelance work. This is also the time to create a budget and stick to it.
• Start your retirement contributions: Begin contributing to your retirement savings. If you’re employed, this is a great time to take advantage of an employer 401(k) match to maximize your investments.

Use the tool below, powered by Bankrate, to explore and compare some of today's top savings account offers:

Growth: Increase savings and start investing seriously

Once you are financially stable, you can start increasing your savings and shift your focus more toward investing. This phase is about building momentum, growing your assets and making your money work more consistently for you over time.

Focus on these key strategies to strengthen your progress:

• Raise your investment rate: If possible, increase your contributions to 15% or more of your income. This helps accelerate long-term growth and keeps your investments aligned with your financial goals.
• Maximize tax-advantaged accounts: Accounts such as 401(k)s, IRAs and HSAs can lower your tax burden while helping you save for long-term goals. Aim to contribute as much as you can within annual limits to get the most benefit.
• Automate investing: Setting up automatic contributions helps keep your investing consistent and removes the need to make decisions each month. Use tools that regularly transfer funds into your investment accounts so you stay on track.
• Avoid lifestyle inflation: As your income grows, it can be tempting to upgrade your home, car or daily spending. Keep your lifestyle aligned with what your income can comfortably support so you can continue building wealth.

Optimization: Make your money work harder

In the optimization phase, the focus shifts to making your money work more efficiently. With a solid foundation and consistent investing in place, this is the time to refine your strategy and improve.

Focus on these key strategies:

• Implement tax strategies: Explore tax strategies that align with your goals. For example, a traditional IRA offers tax-deductible contributions today but taxable withdrawals later, while a Roth IRA uses after-tax contributions and provides tax-free withdrawals in retirement.
• Asset allocation tuning: Review your portfolio regularly to ensure your investments are aligned with your goals. Adjusting your asset allocation over time can help manage risk while keeping you on track to meet your long-term objectives. For more complex decisions, you may consider working with a financial adviser to refine your approach.
• Real estate or additional income streams: Look for ways to create additional income streams, whether that’s investing in real estate or doing some freelance work on the side.
• Invest in HSA and brokerage accounts: Consider investing in HSA and brokerage accounts. While a traditional HSA helps you save for current medical expenses, pairing it with brokerage accounts can help grow your money long-term.

Preservation and income: Protect and use your wealth

Once you have built a solid level of wealth, the focus shifts to protecting it and using it strategically. This phase is about managing risk, preserving what you have worked to accumulate and creating a plan to support your long-term needs.

Focus on these key priorities:

• Focus on risk management: Work with a financial professional to develop a risk management strategy that fits your needs. This goes beyond your investment portfolio and may include added insurance or other protections to help safeguard your assets and provide peace of mind.
• Develop a retirement income strategy: Identify your expected income sources and plan how they will support a comfortable retirement.
• Withdrawal planning: Determine when and how to withdraw from your investments to support your income needs. A tax professional or financial planner can help you structure withdrawals in a tax-efficient way.
• Review estate planning: Revisit your estate plan to make sure it still reflects your wishes. Update your will and consider any additional steps needed to protect your assets and beneficiaries.

You can start in any phase but you can't skip the order

You can begin this process at any phase, but you cannot skip the order. Each phase builds on the one before it, and a strong foundation is essential, no matter when you start.

For example, a high earner with little or no savings still needs to establish financial stability before moving forward. A mid-career saver with a solid financial foundation may be ready to focus on growth and optimization.

If you are nearing retirement, blending the optimization and preservation phases can help you make the most of what you have built.

How to figure out your current phase

To get started, you will need to identify your current phase so you can focus on the right priorities. A quick self-assessment can help you understand where you stand and what to tackle next. Ask yourself these questions:

• Do you have emergency savings? If not, start with the stability phase.
• Are you consistently saving and investing? If so, you may be in the growth phase.
• Are you actively managing taxes and fine-tuning your investments? You are likely in the optimization phase.
• Are you planning how to generate income from your assets? You are in the preservation and income phase.

How to move to the next phase faster

There are several ways to build wealth and move into the next phase more quickly. Increasing your income, whether by negotiating a raise or taking on side work, can accelerate your progress. At the same time, look for opportunities to reduce fixed expenses, such as choosing a less expensive vehicle to lower or eliminate a car payment.

You may also benefit from consolidating and simplifying your bank and investment accounts. This can help reduce fees and give you a clearer view of your overall financial picture. Avoid setbacks that can slow your progress, such as taking on high-interest debt, and stay focused on your long-term goals.

No matter where you start, progress can happen faster than you expect. By focusing on your current phase rather than comparing yourself to age-based milestones, you can take control of your finances and continue building wealth over time.

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Are you retiring soon and have savings goals you need to meet? This is where a certificate of deposit can be helpful. It provides guaranteed returns without risk.

In turn, you won't have to worry about market fluctuations or Federal Reserve policy impacting your earnings. Short-term CDs, in particular, can be a wise savings vehicle as you approach retirement because they can help you reach your goals without tying up your money for years.

It is why I'm going to highlight a specific short-term CD to consider for savers with larger cash reserves (think $50,000 or more). I'll also offer some things to consider before diving into this approach, and how much you can earn.

Maximize your growth in months, not years

When examining CD options, I recommend jumbo CDs to those with larger cash reserves. Why? Because they work similarly to regular CDs, in that you tie up your money for a few months to a year, but you also receive the benefits of a regular CD. Chief among them is fixed interest rates.

It means if the Fed cuts rates sometime this year (which is possible, according to Kiplinger's interest rate outlook), it won't impact your earnings if you sign up for one soon. There are differences between the two CD types as well.

Jumbo CDs require larger deposits, usually around $50,000, but some banks want a minimum of $100,000. Terms range from six months to a year, allowing you to maximize your returns without tying up your money for an uncomfortable period.

If you want to lock one in soon while rates are as high as 4.35% APY, use this Bankrate tool to find the right match for you:

Here's a few reasons why I like them:

• Earn APYs as high as 4.35%
• Guaranteed returns
• Many banks offer FDIC insurance, protecting your deposits up to $250,000
• Quick terms of six months to a year ensure you don't lose cash access for long

The tradeoff: Weighing risk and reward

CDs are not what you would call the most flexible savings vehicle. If you choose a jumbo CD, your money must remain on deposit for the term, or else you face stiff early termination fees that could cost you hundreds of dollars. And that's no good.

The other thing to keep in mind is that you'll limit your earnings with this approach. Some jumbo CDs offer the highest returns of any savings account, but investing can traditionally offer more if you don't mind the risk.

That's why these CDs work best if you're approaching retirement and target specific goals where you already have the cash, and want to earmark it for expenses down the road. This can include:

• Home improvements
• Down payment on a second home
• Splurge purchases, like a classic car or boat
• Reallocating some of your money to less risky investments as you retire
• Starting a business

Two more things to consider before opening one: Your earnings are subject to tax as ordinary income. Considering you could earn a significant amount in a short time, make sure to budget for taxes so you're not surprised when you file.

The other thing is that many banks auto-renew CDs. Therefore, set a reminder on your phone a week or two before the CD matures. This will give you time to investigate options before you make your next move. Of course, if jumbo CD rates are still high, and you don't need the money right away, you can let it ride and see your earnings really add up.

How many can I really earn with a jumbo CD?

Now, we get to the fun part. Here are a few of the top-earning jumbo CDs I found, and how much you can earn with the minimum required deposit for each:

As you can see, you'll earn up to several thousand dollars in a year effortlessly with this approach. Best of all, you'll have quick access to your cash, allowing you to pivot to other investments as the market changes or cash out to fulfill your short-term savings goals.

What if I don't have enough for a jumbo CD?

If this is the case, you can choose a short-term CD that coincides with your savings goal and deposit capacity.

To demonstrate, if you're saving for a trip you're taking in a year, the best one-year CD rates can help you reach them. Keep in mind that CDs have terms ranging from three months to five years, allowing you to match the right account to your goals. If you don't have a specific time goal, I've found the highest CD rates out there are typically on six-month CDs at the moment.

Moreover, deposit requirements for CDs vary by banks. Usually, you'll need at least a $500 to $1,000 minimum to open many CD accounts. However, there are also some, like Vibrant Credit Union, that offer a six-month CD for only a $5 minimium deposit. Therefore, even if you don't have a huge deposit available, you can still qualify for a CD and earn many of the same benefits.

Don't leave thousands on the table

Jumbo CDs are a smart solution for savers with significant cash reserves. They allow you to allocate a portion of your investments to a less risky vehicle, helping you earn thousands of dollars per year. This makes them a great choice for those approaching retirement who need a short-term savings option.

Just remember, these CDs require you to keep your money in for the whole term. Withdrawing early comes with steep penalties. However, if you want to avoid market risk and volatility, signing up for one today ensures you earn the highest rates while they remain available.

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Do you have a long-term savings goal as you approach retirement? You might want to save for a down payment on a house as you plan to downsize or upsize, or maybe you're saving for a big vacation with family or friends.

If you have a goal in mind, finding the right savings solution can help you stay on track to achieve it. This is where the best five-year CD rates can be useful. A five-year CD is a fixed savings option that requires you to deposit your money and leave it for the entire term. It also offers fixed interest rates, so you don't have to worry about decreasing returns if the Federal Reserve cuts rates.

There are pros and cons to using these tools, which I'll get into. Then, I'll discuss three smart reasons to use one and one costly mistake to avoid.

Why I like five-year CDs

Here are a few reasons why I like five-year CDs:

• They offer guaranteed returns
• APYs currently outpace inflation
• Many come with FDIC insurance, protecting your assets up to $250,000 per member

If you're ready to secure your financial future for the next five years, don't wait for rates to drop. Compare the best five-year CD rates using the tool below to lock in a guaranteed return and start working toward your long-term goals:

Things to consider before opening one

On the other side of the coin, here are a few things to keep in mind before signing up for a five-year CD:

• You could earn higher returns with index funds and other investment vehicles, historically
• Early termination penalties are high, equating to a year of earned interest
• Inflation can eat away at your future earnings

If you're OK with the risks, here are three smart reasons to use a five-year CD:

1. Saving on a down payment for a home

As you approach retirement, you might consider changing your address. You could be following a trend where you want to upsize in retirement to accommodate family gatherings or downsize to reduce maintenance.

In any case, a five-year CD can help you stay on track toward your goal. The reason is that they require discipline — if you cash it out before maturity, it can lead to serious financial consequences, such as losing hundreds or thousands of dollars in early withdrawal fees.

As such, earmarking money you know you won't touch can give you confidence that you'll reach that goal in time to buy your home. Use our mortgage calculator to determine how much you'll need to put down to make your mortgage payment budget-friendly.

Or use the tool below, powered by Bankrate, to compare some of today's top mortgage offers:

2. Reallocating money as you near retirement

Another reason to consider a five-year CD is if you're approaching retirement and are looking for less risk for a portion of your investments. A five-year CD fits the bill well because you won't have to worry about market volatility.

You can devote a portion of your money to guaranteed growth. Say you place $100,000 in a five-year jumbo CD with SchoolsFirst Federal Credit Union at a current APY of 4.05%. After five years, you would earn $21,958.04 in interest, bringing your balance to $121,958.04.

To be fair, you won't earn rates nearly as high as you would with an index fund tied to the S&P 500 or other investments, based on historic performance. Yet, you also won't have to worry about loss and volatility, either.

You can park the money for five years, earn a significant return, then reinvest it as your financial needs evolve. It can also achieve balance for your portfolio, especially if it contains a lion's share of higher-risk investments.

If you're ready to build a strategy to reach your retirement milestones, use the tool below, powered by Bankrate, to match with a financial professional who can help you do it:

3. Starting a business

As you approach the finish line of your career, your retirement gives you the financial freedom to explore side gigs or to start your own business. Doing this keeps you active, earns you more income and helps you socialize.

If you already have an idea of what you want to start, then saving for it now ensures you're prepared to hit the ground running when you retire. A five-year CD can be a smart way to save for future business expenses, as you can predict how much you'll need at the time of funding.

Most important, you won't have to rely on as much credit. Using the five-year CD example above, if you plan to start a business in retirement, you could have an extra $20,000 or more by the time you retire. This can give you seed money to buy supplies, advertise, set up an LLC and other expenses that might arise.

While these are suitable options for tucking your cash away for five years, there is a situation when using a five-year CD won't be beneficial.

Avoid this five-year CD mistake

You should not put the entirety of your cash savings in a five-year CD, especially if you'll retire before the five-year term is up. This is also true even if you have other savings, but they're tied up in the market.

While you need to have appropriate savings for your retirement, you also need an appropriate amount of those savings to be immediately accessible to pay bills in your post-salaried life. Five-year CDs feature steep early withdrawal penalties, which could do more harm than good if you need regular cash access and don't have other savings available.

The only time this would potentially work is if you're using a five-year CD as part of a laddering strategy with short-term CDs. Then, you'll have regular access to income.

How it works is that you open a series of CDs, staggering their maturity dates to give you cash access. An example of this, using a $100,000 deposit, would be:

• $20,000 to a six-month CD
• $20,000 into a one-year CD
• $10,000 into a three-year CD
• $25,000 into a five-year CD
• $25,000 into a no-penalty CD (that allows withdrawals after a week)

An alternative savings consideration with less maintenance is to allocate some funds into a high-yield savings account. It will be a better short-term solution because you'll have access to cash as needed, and you won't have to manage five CDs.

With rates as high as 4.2% APY with minimal fees, a high-yield savings account is a great way to stay ahead of inflation and reach savings goals.

Use the tool below, powered by Bankrate, to find the best high-yield savings account options for your needs:

Five-year CDs can help you reach your goals

Approaching retirement opens the door to other opportunities. Whether you want to move, start a business or allocate money to less risky investments, you can have peace of mind knowing a five-year CD can help you reach your goals.

Related content

• Best 5-Year CD Rates
• Do You Have a CD Maturing Soon? Here's What to Do Next
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When the Federal Reserve holds interest rates steady, as it did at its last meeting in June, it can feel like nothing changes for everyday savers. But behind the scenes, banks and financial institutions are still competing for deposits, and some are paying far more than others for the privilege of holding your cash.

If your money is sitting in a traditional savings account earning a fraction of a percent, you're not just missing out on growth. You may be losing ground to inflation, even in a stable-rate environment. The good news is that you don't have to lock your money away for years or take on stock market risk to do better. With a little strategy, you can keep your cash accessible while earning a meaningfully higher return.

Here's how to think about where your savings really belongs, and what it could be worth over time.

Why "safe" doesn’t always mean "smart" with your cash

For decades, savers were taught that the safest place for their money was a traditional bank savings account where the balance never drops and access is always easy. That instinct still makes sense, especially after periods of market volatility.

But safety isn't just about avoiding losses. It's also about making sure your money keeps its ability to pay for what you need in the future.

When your savings earn very little interest, you're effectively accepting a guaranteed loss in purchasing power if inflation runs higher than your account's yield. That can quietly undermine long-term goals, such as building a true emergency cushion, saving for a home down payment or setting aside money for a future career transition or sabbatical.

"Safe" money that doesn’t grow enough to keep pace with rising costs may feel stable, but over time it can leave you less financially flexible than you expected.

What counts as a low-rate account today

A low-rate account is typically any savings or money-market account paying well below the prevailing market rates offered by competitive banks and credit unions. While many large, well-known banks still offer rates under 1% APY, smaller institutions and online-only banks often pay several times that amount.

This difference exists because traditional banks rely heavily on customer loyalty and convenience, such as branch access, bundled services and brand recognition, rather than higher interest to attract deposits.

Online banks, on the other hand, often compete almost entirely on price. For savers, that means the same FDIC or NCUA insurance protections, but very different outcomes when it comes to how much your money earns over time.

How inflation erodes real returns

Inflation doesn't show up as a line item on your bank statement, but its effects are everywhere: higher grocery bills, rising insurance premiums, increased rent or property taxes. When your savings grow slower than prices rise, your money buys less with each passing year.

Even a small gap between your account's interest rate and the inflation rate can have a meaningful impact over time.

For example, if inflation averages 3% and your savings earn 0.5%, your real return is negative 2.5%. That means your emergency fund, while still intact in dollar terms, may not stretch as far when you actually need it. Over long periods, this erosion can turn what looks like a healthy cash reserve into one that falls short when major expenses arise.

What your savings could earn over time

Here's how much the same amount of money could grow in a low-rate account versus a higher-yield option, assuming:

• Low-rate account: 0.5% APY
• High-yield account: 4.2% APY
• Interest compounded annually

Even modest savings can grow when your interest rate keeps pace with the market.

At mid-level savings balances, the opportunity cost of low yields becomes harder to ignore.

Even over a relatively short time horizon, the difference can amount to a used car, a vacation fund or a boost to your emergency savings.

Use the tool below, powered by Bankrate, to compare today's top savings offers:

Where to keep your savings for stronger returns

Several types of savings accounts can offer higher yields while keeping your money accessible and federally insured.

High-yield savings accounts

These accounts function much like traditional savings but typically pay several times more in interest. Most are FDIC- or NCUA-insured, meaning your money is protected up to legal limits, just like at a major bank. They’re well-suited for emergency funds, short-term savings goals and cash you may need on short notice.

Online banks vs. traditional banks

Online banks often offer higher yields because they don’t maintain expensive branch networks. The tradeoff is a more digital-first experience, which may mean no in-person service but better mobile apps and fewer fees.

Traditional banks still appeal to customers who value face-to-face help or who bundle checking, loans and savings in one place. But that convenience often comes at the cost of lower interest.

Money-market accounts

Money-market accounts combine features of savings and checking, often paying competitive rates while allowing limited check-writing or debit card access. They can be a good fit for savers who want slightly more flexibility without giving up yield.

Short-term CDs vs. liquid cash

Certificates of deposit (CDs) typically offer higher rates in exchange for locking up your money for a set period. Short-term CDs, ranging from three months to a year, can be a smart compromise if you have cash you don’t expect to touch soon but still want relatively quick access.

How to protect liquidity without losing yield

Emergency fund rules of thumb

Experts recommend keeping three to six months’ worth of essential expenses in an account that’s easy to access. A high-yield savings or money-market account is often a better home for this money than a low-rate savings account because you can still reach it quickly, but it works harder while it waits.

Laddering strategies

If you’re considering CDs, a laddering approach can help. Instead of locking all your money into one long-term CD, you spread it across multiple CDs with different maturity dates. That way, you regularly regain access to a portion of your cash while still benefiting from higher rates.

When to keep cash vs. invest

Money you’ll need in the next year or two generally belongs in cash or cash-like accounts. Longer-term funds, such as retirement savings, are often better invested for growth, even if that means tolerating some market ups and downs.

Use the tool below, powered by Bankrate, to connect with a financial professional who can help you develop a road map to reach your personal financial goals:

Real-world tradeoffs: Safety, access and yield

Every savings choice involves balancing three factors: how safe the money is, how easy it is to access and how much it earns. FDIC- and NCUA-insured accounts keep safety high across the board up to their limit, so the real differences come down to convenience and yield.

Some people prefer the simplicity of one bank for everything. Others are comfortable splitting accounts by using a local bank for checking and an online bank for high-yield savings to maximize returns.

Many savers find that using two or three different accounts for different purposes gives them the best overall balance between convenience and performance.

Taxes and account types to consider

Interest income doesn't always feel like "income," but the IRS treats it that way. At tax time, your bank will report how much interest you earned, and it may increase your tax bill.

For savers in higher tax brackets, this can slightly reduce the effective return of even a high-yield account. That's one reason long-term savings goals often benefit from tax-advantaged accounts such as IRAs, HSAs or employer-sponsored retirement plans, where growth can be tax-deferred or even tax-free, depending on the account type.

Your money should be working as hard as you do

Leaving money in a low-rate account isn't just a passive choice. It’s an active decision to accept lower growth. In a steady-rate environment, the advantage often goes to savers who shop around, compare options and aren’t afraid to move their money to a better home.

The right account won’t just protect your cash. It will help it grow, preserve its buying power and support the goals you’re working toward, whether that’s peace of mind, financial independence or simply having more options when life throws you a surprise.

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• Money Market Account vs High-Yield Savings Account

My grandma used to say a penny saved is one less you'll have to earn in the future. I was a kid at the time, so that message didn't resonate well. I was more focused on using the money I earned from mowing the lawn to acquire toys and video games.

However, as an adult, that message really changed the way I approached spending and saving my money. Why not make your money work for you, so you don't have to work harder in the future to earn more of it?

This is where psychology comes into play. Psychology and money choices are linked, and you can use this link to make saving easier throughout the year. Here are four tricks you can employ to save more in 2026.

1. Break bigger goals down into smaller ones

Wanting to save more is a lofty idea, but if you don't have a "why" for it, you'll find it harder to achieve. Your purpose is your roadmap, setting a course for you to achieve a specific goal.

Whether you're saving to make a down payment on a home, do home renovations without credit, establish an emergency savings fund, or just upgrade your hotel room on your next trip, write down why you're saving and set a goal for how much you want to save.

"Define very specific financial goals and why they are important to you," Lillian Knight, a licensed therapist and owner of Lillian Knight Financial Therapy, tells Kiplinger.

Then, she says, "Break them down into smaller goals if needed." If you want to save $50,000 for a down payment for a home, you're not likely to achieve that in one paycheck. However, if you set smaller, attainable goals, such as saving a certain amount each month, you gain more confidence in your ability to achieve them.

As you reach these smaller milestones, you build momentum. "You get the satisfaction and dopamine hit of achieving the short-term goals while saving for the longer-term goals," Knight says.

2. Create healthy barriers to protect your goals

People don't just change their habits on a dime. If you tend to spend more than you should, willpower alone won't necessarily help you become a better saver. Often, it helps create barriers that save you from your worst self.

For example, Knight suggests, "Make contributions to savings automatic so that you don't have to rely on motivation to save in the moment."

Ask your employer to send a certain percentage or dollar amount of each paycheck directly to your savings account, rather than a checking account. Set aside as much as you can, as the more you can grow your balance, the more motivated you'll be to ride the wave of earned interest.

Putting your money automatically in an online bank savings account will also discourage you from spending it right away. To spend the money, you'd either need an ATM card, which not every high-yield savings account provides, or you'd need to transfer the money to your checking account. Transferring money between accounts takes time (sometimes up to three business days), so you'll hold yourself back from impulse purchases.

If you need help getting started, here are some of the best high-yield savings accounts:

Keep in mind that while this will help fill your savings account, it won't necessarily stop you from making impulse purchases with a credit card. To further rein in spending, consider using one of the best budgeting apps. Personally, I'm a fan of Empower.

3. Visualize your achievement

Don't forget that these behaviors will make things easier for you in the future. A study conducted by PubMed Central found that participants who viewed their future selves through age-progression technology were more likely to make financial decisions that benefited their future selves, such as allocating more money to retirement.

Part of the psychology behind this, the researchers wrote, is that we often "fail, through a lack of belief in imagination, to identify with [our] future selves."

This illustrates how visualization is a motivating factor. If you're saving for a home, picture what it would be like to receive the keys for the first time or what life looks like in the neighborhood you want to live in. Doing this makes it real, which can help you maintain that focus.

It also reminds you that your future self and your current self are the same person, as odd as that might sound. When you choose to overspend today and let "future me" deal with the consequences, you're just hurting yourself. On the flip side, every positive move you make today helps you, even if you won't see the fruits of your labor until the future.

4. Have an accountability partner

One of the best ways to stay on course with your savings goals is to share them with a trusted loved one or spouse.

"If you are partnered, regular money meetings where you discuss progress toward shared financial goals can be a source of motivation and connection that helps increase patience," remarks Knight.

When choosing an accountability partner (unless it's your spouse), find someone who's had success with a similar goal. Glean insights from them and have regular conversations about how you're doing, not only with achieving goals, but also with how you remain patient and persistent throughout the process.

Having someone in your corner cheering you on can help you weather the doubts or the impatience that can creep up when trying to save for long-term goals.

Long-term rewards: Financial independence and peace of mind

Reaching your long-term savings goals feels like a tremendous accomplishment. It gives you confidence that you are on the right track with your spending and savings habits. It can provide added momentum to achieve other financial goals you have.

Furthermore, with every savings goal you reach, you're on the road to financial independence. If a job loss or surprise bill arrives, you have the peace of mind of knowing you can use your savings to pay for them instead of relying on debt that'll take you farther from your goals.

Remember, savings isn’t just financial growth — it's a confidence and security boost that feeds motivation.

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President Donald Trump nominated Kevin Warsh, a former governor of the Federal Reserve, to be the next head of the Fed back in January. On Wednesday, Warsh received confirmation from the Senate, which voted 54-45 to make Warsh the next Fed chair.

Warsh served on the Federal Reserve Board of Governors from 2006 to 2011, after being nominated by President George Bush. On the Fed chair selection, President Donald Trump said in a social media post, "I have known Kevin for a long period of time, and have no doubt that he will go down as one of the GREAT Fed Chairmen, maybe the best."

Trump's appointment could impact the Fed's future policy — which will influence how much you'll earn on your savings accounts. Here's what savers should know.

A policy tug-of-war between Trump and the Fed

Trump has criticized the Federal Reserve for being slow to cut interest rates and frequently called for deeper cuts. After the Fed reduced rates by 25 basis points last December, Trump said the move "could have been doubled," according to Bloomberg. Trump wants much lower interest rates to help economic growth by lowering borrowing costs.

Warsh has built a reputation as an inflation hawk, often favoring higher rates. More recently, however, he has criticized the Fed for being slow to cut rates, calling that hesitancy a "mark against them" in a July interview with CNBC.

Meanwhile, inflation is a major sticking point for the Federal Reserve. The latest CPI report showed the Consumer Price Index rose 4.2% year-over-year.

Energy costs were the chief culprit in rising prices. While the Iranian War resolution lowered fuel prices, it could take until 2027 for energy prices to fully stabilize.

This means that while inflation is likely at its peak, it could remain sticky throughout the summer months, making it difficult for the Fed to do anything but wait it out.

Will the new Fed chair lead to more rate cuts?

Trump's appointment of Warsh signals a desire for a more aggressive approach to rate cuts. Even so, a Fed chair more aligned with the president's policy preferences does not guarantee a steady pace of rate reductions.

The reason? The Federal Open Market Committee (FOMC) has 12 voting members. The Fed chair only has one vote and must build consensus with the committee to shape policy decisions.

However, there's one key area to watch: The Board of Governors has seven members, three of them Trump appointees.

Jerome Powell, who will end his term as the Fed chair on Friday, announced he would remain on the Board of Governors to help the Fed keep its independence. He will also serve a crucial vote on Fed rate decisions moving forward until his term ends in early 2028.

How can savers prepare for a new Fed chair?

Your best course of action is to find a savings account that keeps pace with inflation. If you have short-term savings goals, a high-yield savings account remains one of the wisest choices.

You can earn APYs as high as 4.20% with minimal fees. Just know that if the Fed cuts rates in the future, it could impact your earnings since savings accounts have variable rates.

Use this Bankrate tool to find the best options fast:

If you have the flexibility to lock in your cash, you should look at CDs. Unlike high-yield savings accounts, CDs have set rates, so what you get now is what you'll get through the whole term of the CD, even if the Fed cuts rates.

The tradeoff, however, is that you have to hold your cash in the CD for the full term to get the full interest payout. That means if you get a five-year CD, for example, you would have to leave your cash there for five years.

The best CD rates Kiplinger has found are around 4%, varying depending on the issuer and term. Use this Bankrate tool to find and compare the best CD rates quickly:

Final thoughts on the new Fed chair's confirmation

The Senate's confirmation of Kevin Warsh as the new Fed chair could have a significant impact on future rate cuts. However, keep in mind the Fed has 12 voting members. So, even with another Trump appointee leading the group, it doesn't necessarily mean the Fed will cut rates at every meeting.

The more pressing focus is inflation. As prices keep rising, sheltering your money from its impact becomes more vital. That's where a high-yield savings account can help. It will keep your earnings on pace with inflation. And as prices stabilize and inflation slowly lowers, you'll be in a prime position to improve your purchasing power.

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It eventually happens to all savers: You'll receive that dreaded email or letter from your bank informing you that the annual percentage yield (APY) on your savings account dropped.

In fact, many savers have been receiving these letters recently. The reason? The Federal Reserve cut rates at each of its last three meetings due to declining job growth. And when that happens, banks follow suit by lowering APYs on all savings accounts.

Therefore, if this has happened to you or you're concerned it could happen soon, I'll cover the next steps you should consider.

Why do banks lower savings account APYs?

Banks can alter the terms of your savings accounts for multiple reasons. Primarily, this happens when the Fed cuts rates.

Why? Because banks use the federal benchmark rate to determine APYs. When this rate drops, it reduces borrowing costs, which also reduces the profit a bank can earn from loans, so they pull back on paying out higher returns on savings accounts.

Rate cuts are not the only reason banks lower APYs. If you're on a promotional rate, when that term expires, you'll also receive a lower return. Banks can also lower APYs if they have too much money on deposit and don't want to cut into their profits. Regardless of the reason, knowing all of your next steps can help you make the best choice for your money.

Does it make sense to stay with the same account?

It depends on what you're planning to do with the money in your savings account. If you're using the account for short-term savings goals, the cuts won't impact your earnings much unless you have larger balances.

To illustrate, suppose you have $5,000 in your high-yield savings account, earning 4.00% APY. Over the course of a year, you would earn $204.04 in interest. If it dips to 3.75% APY, you'll receive $191.05; that's not a significant difference, especially if your goal is only to maintain those savings for the short term or to hold an emergency fund that'll grow conservatively.

However, if you're looking to truly maximize your earnings, see how your new rate compares to some of the best high-yield accounts:

I like these accounts because even with rate cuts, their APYs remain higher, helping you stay ahead of inflation. And in the case of Newtek Bank, you'll earn one of the highest APYs available, with no account fees or balance minimums.

If those rates are significantly higher than your new rate, you should consider switching banks. Thankfully, this is easy to do.

Online bank accounts usually only take minutes to set up by providing all of your basic information (name, address, Social Security number, etc.), and you can fund them via an ACH transfer from your old savings account. Once you do that, you can close your old savings account and enjoy higher returns.

Explore other savings options

If you're not thrilled about rate cuts impacting your earnings, consider other savings options. A CD can shield your money from rate cuts since they have fixed interest rates.

If you're earmarking money for specific goals, CDs help you stay on course. You can map out exactly how much you'll earn over the course of the term, and there are no surprises. Additionally, most CDs have early termination fees, which means if you break the CD term before it matures, you'll lose money, so you're incentivized to keep storing those savings.

How much you lose depends on the term. For short-term CDs of a year or under, you're looking at a few months, while longer-term CDs can cost you six months to a year in earned interest. Therefore, before signing up for one, ensure you can tie up your money comfortably for the term, or choose a shorter term that works better for you.

You can find the best CD rates and terms that work for you using this Bankrate tool:

Meanwhile, if you're concerned about liquidity but don't want rate cuts eating into your returns, consider a no-penalty CD. They offer fixed interest rates, but you can also access your cash after the vesting time. The vesting period runs from one week to a month, depending on the bank.

Keep in mind that withdrawing it early means you won't maximize your return. But you also won't have to pay an early withdrawal fee.

Are more rate cuts on the horizon?

In the short term, it doesn't seem likely. David Payne, of the Kiplinger Letter, notes the Fed will likely leave rates unchanged when it meets in January, as Fed Chair Jerome Powell wants economic trends to dictate the Fed's future policy.

This also mirrors what other economists forecast. CME FedWatch reports there's an 88% chance the Fed doesn't cut rates at its January meeting.

That said, there are two things to watch in 2026: President Donald Trump will appoint a new Fed chair very soon, and he has said he wants someone who would make more aggressive rate cuts. However, there are 12 voting members on the Federal Open Market Committee, so the chair change alone might not sway a voting majority for more rate cuts.

The other thing to watch is what Powell does next. While Powell's term as Fed chair ends in May, he has two years remaining as a Fed governor, meaning he can continue to vote on Fed policy. If Powell leaves, it would create a majority among Trump appointees within the seven-member board of governors, as he gets to pick Powell's successor.

Keep an eye on rate cuts and how they impact your goals

Ultimately, rate cuts can diminish returns. But it doesn't mean there aren't ways to protect your money from them, either. You can switch to a CD or find a HYSA that offers rates high enough that a small drop will have minimal impact on your earnings.

The key is to focus on your goals and be flexible as rates change. Doing so can help you spot the right accounts to help you reach your savings goals quicker, even in a rate change environment.

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The Federal Reserve’s interest rate cuts during the fall are having a ripple effect across most consumer savings rates. The federal funds rate — the rate banks use to borrow and lend to one another — recently dropped to a target range of 3.75% to 4%, the lowest level in about three years. And the consensus among economists is that rates will continue to fall modestly in 2026, perhaps by another half a percentage point or so by year-end.

The result for savers: The days of easily earning 5% or more on cash have passed, financial advisers say.

“Many people were getting used to 4% and 5% yields on short-term money, but this is quickly drifting down, to as low as 2% to 3% in some cases,” says certified financial planner Todd Calamita, president of Calamita Wealth Management in Charlotte, N.C. “Complacency can cost people thousands of dollars if they don’t keep a watchful eye on the interest their accounts are paying.”

Today’s lower savings rates, though, are still higher than cash yields have been for much of the past 15 years — 1% or less was common during the period between the Great Recession and the pandemic — and, on average, they continue to outpace inflation. So you can still earn a solid real return if you shop around.

Experts caution, however, that nabbing the best rate shouldn’t be your only consideration when it comes to storing cash. “Safety and liquidity should also guide your decision, not just yield alone,” says Bennett Gordon, a CFP with MGR Wealth Management in Boca Raton, Fla.

Here is what advisers recommend as the best short-term savings options now, depending on how quickly you might need access to your money and your tolerance for risk.

High-yield savings and money market accounts: Easy access, ironclad safety

If you want fuss-free, nearly instant access to your cash, your best bet is a high-yield savings account or a money market deposit account. Many banks and credit unions are paying about 3.5% on these federally insured accounts now, while some online banks are promoting rates of 4% or better.

Recently, for instance, Pibank was paying 4.6% on its savings account, and TIMBR was offering 4.4%.

The trade-off? In return for a better rate, you may be limited to six or fewer monthly transactions or required to meet a minimum balance, typically ranging from $25 to $2,500. Money market accounts, which offer debit card and check-writing privileges, tend to have more restrictions than high-yield savings accounts.

Before switching from your current financial institution, do the math to make sure a move is worth the hassle, Calamita says. You’ll double your payout by moving to a bank paying 4% instead of 2%, but on a $5,000 balance, that translates to only an extra $100 or so a year.

Mutual funds and ETFs: Better returns, a bit of risk

Storing short-term savings or emergency reserves in a money market mutual fund or exchange-traded fund can be a good option if you’re trying to top your bank’s rates but still want strong safeguards against losing money, or if you need diversification and added safety in an investment account, such as an IRA or 401(k).

Sold by mutual fund and investment companies, money market funds invest in high-quality short-term Treasury bills and municipal and corporate debt. While they’re not backed by the Federal Deposit Insurance Corp., they aim to maintain a stable net asset value of $1 per share.

In effect, they pledge that you’ll never lose your initial investment, says Jeremy Keil, a CFP in Milwaukee and author of Retire Today: Create Your Retirement Master Plan in 5 Simple Steps. Top payers recently included Gabelli U.S. Treasury Money Market Fund (GABXX) with a 30-day yield of 4% and DWS Government & Agency (DTGXX), paying 3.94%.

If getting a high rate on your cash is your top goal and you’re willing to accept a bit more risk, ultra-short bond ETFs are also an attractive option. Although the funds, which invest in short-term, investment-grade debt, can fluctuate in value, the shifts are typically tiny.

In 2022, when bonds generally were hammered with double-digit declines, the average ultra-short bond fund lost just 0.1%, according to Morningstar.

High-quality, top-yielding options recently included Fidelity Low Duration Bond Factor ETF (FLDR), with a 30-day yield of 4.49%, and Vanguard Ultra-Short Bond ETF (VUSB) and iShares Ultra Short Duration Bond Active ETF (ICSH), both yielding 4.25%.

For added safety, you might go with a Treasury-only ETF, such as State Street SPDR Bloomberg 1-3 Month T-Bill ETF (BIL), recently paying 3.71%, or BondBloxx Bloomberg One Year Target Duration US Treasury ETF (XONE), offering 3.64%.

“The most common mistake is comparing a high-quality money market or bond ETF with a low-quality one,” Calamita says. “The rates on the surface can often look very appealing, but there’s no free lunch. A substantially higher yield always means higher risk.”

CDs: Higher returns, delayed access

For cash you won’t need anytime soon, locking in recent yields for several months or even a year through certificates of deposit can be a smart choice, given the strong likelihood of additional rate cuts in 2026. Online banks and credit unions lately have been paying between 3% and 4% on CDs with maturities of one year or less.

Top-yielding CDs include a 13-month CD from Hyperion Bank, recently paying 4.25% (minimum opening deposit: $10,000), and a 13-month certificate from Genisys Credit Union, at 4.3% ($500 minimum).

You can find a CD term that works for you using this Bankrate tool:

These federally insured accounts, however, offer little flexibility. Most charge you a few months’ worth of interest if you remove the funds before the term ends, although some don’t. Look for ones labeled no-penalty CDs if you might need early access to your money.

The downside to CDs? If markets behave unexpectedly and interest rates begin to rise, you risk being stuck in an account paying less than other cash options. So don’t go overboard tying yourself to today’s rates.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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"You've got to be kidding me — we can't afford that."

That was my future mother-in-law's response when I suggested some 30 years ago that she start an IRA and set up automatic monthly contributions .

My future in-laws were blue-collar workers juggling multiple jobs to make ends meet, with two kids in college and two in high school. They lived within their means but weren't familiar with investing, and my mother-in-law didn't have a workplace retirement plan.

I said, "Just give it a try for six months — if you can't afford it, you can always stop. And if it comes out of your checking account automatically, you won't miss it."

After months of pleasant but persistent persuasion, she decided to give it a go.

Creating this habit and making it automatic helped my mother-in-law achieve this important savings resolution.

Financial resolutions for the New Year

As the calendar turns to a new year, it's a great time to think about your resolutions — especially those related to personal finance.

Vanguard's recent consumer survey found that 84% of Americans have a financial resolution for 2026.

While 82% feel somewhat or very confident in their ability to achieve it, sticking with it for the year — let alone beyond the second Friday in January, known as Quitter's Day — can be tough.

Vanguard has four principles for investing success: goals, balance, cost and discipline — and in my opinion, discipline is by far the hardest to follow. But there's a secret for making healthy savings habits stick: Make them automatic.

Saving for your current self: Short-term goals

The survey's top two savings resolutions were to build an emergency fund and leverage a high-yielding account for short-term savings goals.

Where to begin?

First, make sure you're using a high-yielding savings vehicle so you can earn stronger returns. If you're one of the millions keeping cash in a traditional bank savings account, you're probably earning next to nothing.

If your annual percentage yield (APY) is less than 3%, it's probably time to reconsider where you're saving.

For example, as of December 12, 2025, Vanguard's Cash Plus Account offers an APY of 3.10%, although the APY will vary.

Once you've identified a high-yielding savings vehicle with a strong APY, consider automating a portion of your paycheck to that account.

Here's an idea to get you started: I bet you have at least one subscription to a streaming service you don't watch or a membership you don't use. Cancel it and redirect that money with a recurring contribution toward your savings.

Saving even $20 per month can add up quickly, thanks to the power of compounding.

Saving for your future self: Retirement

Start by checking out your workplace retirement savings plan, if you have one. Chances are, you're already set up for success.

According to Vanguard's How America Saves report, most plans will automatically enroll participants, set a contribution rate, match contributions up to a certain percentage and invest in a diversified portfolio.

Now is a good time to confirm if your contribution rate aligns with your intentions — especially if you've recently switched companies and might have been defaulted to a lower rate than your prior plan.

If you don't have a workplace plan, consider opening a traditional or Roth IRA and setting up automatic contributions.

Saving for your loved ones' education

College, secondary school and vocational training can all boost your potential earning power — but they can get expensive. A 529 savings account is a great way to save for education-related expenses.

You can set up automatic contributions to your 529 plan, too.

Make the habit automatic

My mother-in-law contributed faithfully to her IRA for more than 20 years until she retired — and today, it provides her with income.

Her unwavering discipline through bull and bear markets came down to one crucial decision: She made her monthly contributions automatic.

As you enter the new year, automating your contributions can go a long way toward helping you keep your financial resolutions in 2026 and beyond.

It might even earn you some brownie points with your mother-in-law.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

If you have a CD at the end of its term soon, the first step is to ensure it doesn't automatically renew before you choose what to do with your money. Even if you renew it, you want to be sure you're making that decision yourself. These steps will help you decide what to do next.

If you miss the maturity date, no worries: Many banks offer grace periods of seven to 10 days after the maturity date, during which you can cancel the CD and still have access to your money without incurring any penalties.

Next, you'll decide whether you want to keep the money in the same CD or explore other options. If you're on course to reach your retirement plans and want to avoid any short-term market volatility and grow your earnings without much risk, here are some smart options to consider.

Let your CD roll over

In some cases, it does make sense to let your CD roll over. If the rates remain the same and you're satisfied with what you're earning, then there's no need to switch. Make sure your bank will auto-renew the CD and do a quick rate check before they do.

This works best if you allocate some of your money to a less risky investment, don't want to contend with shopping around, and you like the bank you're using.

However, if your financial goals change, you want to try a new bank or you're looking to grow your money in different ways, here are a few other options to consider.

Consider short-term CDs for maximum growth, flexibility

If you don't want to tie up your money for a long period of time, but also don't want to face diminishing returns from rate cuts, a short-term CD could be a smart option. Finding a term from three months to one year ensures you lock in rates while they remain high.

It's perfect, too, if you have short-term savings goals you want to achieve over the next year, such as paying off debt or saving for a trip. What's nice about a short-term CD is that you can get in, earn some money, not worry about Fed rate cuts (CDs have fixed rates) and get your money back quickly for other investments.

Use the tool below, powered by Bankrate, to compare today's top CD account offers:

The only thing to remember is that with shorter-term CDs, you face a quicker turnaround time to reinvest those funds. This can be good news if inflation continues to rise and you need to pivot to investment vehicles that can earn you more.

Gain peace of mind with long-term rate protection

Another option is a long-term CD. The best five-year CD rates offer 4.10% APYs, and locking one in now could shield you from any future rate cuts.

They're also great if you're looking at longer-term savings goals. To demonstrate, you might be retiring in the next five to 10 years, and want to earmark some money for a dream vacation or renovations before downsizing after you retire.

A five-year CD can help you reach these goals without worrying about lower APYs. The only thing to remember is that long-term CDs come with significant early-termination fees, with some levying up to a year of earned interest.

What if neither option sounds good, and you want some middle ground? CD laddering could be a smart approach. How it works is you take some money and spread it over the course of multiple CDs. Here's an example using $50,000:

• Open a six-month CD with $5,000
• Open a one-year CD with $10,000
• Open a three-year CD with $10,000
• Open a no-penalty CD with $5,000
• Open a five-year CD with $20,000

The goal of this approach is to stagger your maturity dates so you're able to lock in higher rates for long-term growth, while also having quick access to some of your cash to fulfill short-term goals or reinvest it in other avenues.

Stay liquid while exploring your next investing steps

If you're unsure where to turn and don't want to tie your money into a long-term CD, a high-yield savings account is still a smart choice to consider. Even though they have variable rates, many of the best high-yield savings accounts can still help protect your cash while earning competitive returns.

Best of all, you have access to your money whenever you want it. This is critical if you're at a juncture where you're changing retirement allocations and need to park your cash and grow it before determining next steps.

Overall, these strategies can help with the next steps after your CD matures. Whether you're looking to save for goals as you near retirement or want some liquidity as you weigh next investment steps, these avenues allow you to reach your milestones your way.

Use the tool below, powered by Bankrate, to connect with a financial professional who can help build a personal road map to your financial goals:

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Whether you're looking to build your emergency fund or save for a short-term goal, a high-yield savings account (HYSA) can help you achieve them. They're also great savings vehicles for investors looking to avoid the short-term capital gains tax.

When searching for a HYSA, the best place is online, because online banks offer much better returns and their accounts usually come with no account minimums or fees.

If you've been curious about opening a savings account online but haven't gotten around to it, I'll show you an easy way to start maximizing your returns. Best of all, you can do it in a matter of minutes.

A checklist for finding a high-yield savings account that fits your needs

Before choosing between a myriad of online savings options, here are a few questions to answer:

• How often do you need to access your money?
• Do you plan to move all your banking online or just your savings?
• Does the APY help you reach your financial needs?
• Is the bank FDIC-insured? (This protects your money up to $250,000 if your bank fails)
• How easy is it to transfer money in and out of the account?
• Does the bank offer responsive customer service?

Answering these questions can narrow down your search. From there, we did the homework for you. I review savings rates weekly and found these to be among the best offerings available:

Steps for opening an online savings account

Once you have the account you want, setting it up is easy. Normally, the bank will guide you through the process through application prompts. You'll need to provide basic information, such as your name, address, phone number, Social Security number, date of birth and email address.

Furthermore, your new bank will have you set up a username and password for online access. Use a password manager such as 1Password to assist you. Password managers create a layer of security with hard-to-crack passwords.

Finally, you'll need to supply your funding information. Usually, when you open an online account, you can transfer money from another bank account via an automated clearinghouse (ACH) transfer.

As such, they'll need your bank account and routing numbers to complete it. Once you finish the application, your bank will review it, verify your identity and you'll receive a confirmation email once they open your account.

Keeping your savings account secure

Since you're accessing your account online, security is essential. Along with using a password manager, keep these online safety tips in mind:

• Never write down your login
• Always enable two-factor authentication (2FA), which is when your bank will text or email you a code to access your account
• Don't use public Wi-Fi to access your account, as others accessing the same network can see your activity
• Set up account alerts via text, as this can help you identify any unauthorized activity so you can report it promptly
• Be aware of phishing scams, in which scammers will text or email you a link claiming to be from your bank, asking for personal information

Doing these things will keep your account safe. It will also help you reap the rewards of having an account that offers you better rates and fewer fees. However, there are a few things you should consider before opening one.

The challenges of online banking

The biggest challenge I've encountered with online banking is making cash deposits, as deposit options vary depending on your bank. Some banks allow you to do so through ATM transactions if you have a card, while others require you to visit a local CVS to complete the deposit (Varo Bank offers this).

A workaround is to deposit cash into your checking account (if you have a local bank) and transfer it electronically via ACH to your online bank. It usually takes just one business day for the transfer.

Another aspect to consider is customer service. With a local bank, you have a face-to-face interaction with a banker. In contrast, online banks handle customer service through phone, chat or email.

If you're uncomfortable with this form of engagement or have an aging parent who relies on in-person guidance, an online account might not be the best choice.

Final thoughts: Making the switch is well worth it

Online banks offer ease of use, higher APYs and fewer fees, but there are a few trade-offs to consider, including limited options for cash deposits and the lack of in-person customer service.

Even so, an online high-yield savings account can help you maximize your returns. Opening one is typically easy and secure, making it a smart step toward reaching your financial goals.

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Jumbo CDs are one of the most versatile tools for savers. If you're sitting on $100,000 and want to diversify some of your holdings into a savings account, this is arguably the best savings solution for you.

Why? Because it achieves several objectives: One, the top-earning accounts offer rates above 4%, helping you earn thousands fast.

Two, jumbo CDs don't require you to tie up money for long periods, as they have terms ranging from six months to one year on average. If you want to make some money, avoid the short-term capital gains tax and have quick access to your cash for other investments, a jumbo CD is a suitable, in-between option while you investigate future moves.

How much can you earn with a $100,000 jumbo CD? I'll break this down, show you the best accounts and key considerations before signing up for one.

A quick way to make thousands effortlessly

Even with the Federal Reserve cutting rates three times, jumbo CD rates haven't dropped yet. Here are some of the best options to consider:

How much can you earn? Let's use our top example, ECFU Financial Credit Union. They have six-month and one-year jumbo CDs offering 4.35% annual percentage yield (APY), which is among some of the best rates I've found with CDs and savings accounts.

This shows you can earn thousands of dollars effortlessly in a quick window. Before you sign up for an account, make sure you understand how jumbo CDs work.

What are the downsides of a jumbo CD?

The first is that you're going to limit your earnings compared with riskier investment strategies. If you were to take that $100,000 and place it in an index fund tied to the S&P 500, returns average around 10% annually. However, with the higher returns come elevated risk, and historic averages are not necessarily indicative of what you could earn.

The other thing to consider is that jumbo CDs work the same as regular CDs in that once you sign up, you're locked in for that term. That's why they work great for diversification because it's a great place to park your money and forget about it. But, if you do need it for any reason before the maturity date, early termination fees apply, amounting to months of earned interest.

This could equate to hundreds of dollars, so this approach makes the most sense when you treat jumbo CDs as a part of your bigger investment strategy.

As a final point, it's important to remember that the interest will count as taxable income, so you should consider if the yield would impact your tax strategy.

Is now a good time to lock in a jumbo CD?

Now is an excellent time to sign up for a jumbo CD. The Federal Reserve has been on a rate-cutting spree due to ample signs of weakness in the job market.

That's what makes CDs such worthwhile investments: They offer fixed interest rates. If you sign up for one today and the Fed cuts rates a few times while you have your CD, it doesn't impact your earnings, since CDs have fixed interest rates.

Given that rates can drop at any moment following a Fed decision, you'll want to strike now while rates far outpace inflation. Whether you want a jumbo CD or another CD term, this Bankrate tool can match you with one fast:

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If you’re looking for the best interest rate on a savings account, chances are you’ll find it at an online bank. Online banks, which are banks that operate without physical branches, offer convenient digital banking and competitive interest rates that can maximize your return on your savings.

The national average interest rate for savings accounts is 0.61% APY, per Bankrate. However, online banks offer rates as high as 4%.

Since online banks have lower overhead costs, they're able to pass on better interest rates to customers than you'll typically find offered by traditional banks. We'll cover why interest rates change, some of the benefits you'll find with online banks and a few things to consider before making the switch.

How interest rates are changing and why it matters

Interest rates on savings accounts have eased modestly over the past year as the broader rate environment has shifted. The national average savings account rate stood at 0.47% in mid-January 2024 before gradually dropping to 0.39% by December 2025, according to FDIC data.

Why have they lowered? The Federal Reserve issued three rate cuts in 2025 due to a weak jobs market. When the Fed lowers rates, it impacts savers with lower APYs.

Thankfully, there's good news: The Fed refrained from cutting rates at its January meeting. And J.P. Morgan believes the Fed will hold steady with no rate cuts for 2026, making this an ideal time for savers to capitalize on higher rates with online banks.

Use this Bankrate tool to shop and find the best savings accounts fast:

Pros of banking online

For savers weighing whether to make the switch, the benefits of online banking extend beyond higher interest rates. Here are a few pros to consider:

• Higher interest rates and potentially lower fees. Since online banks don't have the overhead of maintaining physical branches, they tend to offer higher interest rates on savings accounts. You may also find that online banks have lower fees than traditional banks.
• Often no minimums. Traditional banks often require you to maintain a minimum balance in your checking or savings account. If your balance drops below the minimum, you'll be required to pay a monthly fee. Some online banks will waive that minimum balance for a fee-free approach.
• Modern mobile features. Online banks often offer modern mobile features, including AI budgeting tools, face and fingerprint ID app capabilities, the ability to freeze and unfreeze your digital card, real-time spending alerts and more.
• Quick account opening/management and low cost. Opening an account with an online bank is typically a quick and easy process. The setup process is typically quick, and you'll often get instant access to your account. Costs tend to be minimal, making digital banking an appealing option.  

Cons and things to consider

While there are many benefits to online banking, you should also be aware of the drawbacks:

• No branches / limited in-person service. Since online banks lack physical branches, you can't get in-person customer service. These banks may offer customer service via phone, online chat or social media, but the customer service methods and availability can vary from bank to bank. If you want the reassurance of being able to go to speak with a person directly, digital banking may not be the best choice for you.
• Cash deposit hassles. Depositing cash in an online bank can be a hassle. Some banks partner with retailers like Walmart, CVS or Dollar General, and you'll need to go to one of those retailers to make your deposit. You may also be able to use an ATM to make a cash deposit.
• Varying rates. While digital banking frequently offers higher interest rates, those rates can still fall quickly, decreasing the value you're getting from digital banking. Some online banks may offer higher promotional rates that will decrease over time. Be sure to read the bank's policies to fully understand how interest rates may change.  

Where to find the best savings rates

With the national average savings rate sitting at 0.61%, the gap between traditional banks and online options remains wide. Here's how a few online banks currently stack up.

• Varo offers a high-yield savings account with 5.00% APY on up to $5,000, and 2.5% APY on the rest of your balance.
• AdelFi’s personal savings account offers new members 5% APY on up to $5,000, and 2.25% APY on balances from $5,000 to $10,000.
• SoFi’s high-yield savings account features a six-month introductory 4.30% APY and a standard 3.60% APY.
• Axos offers an Axos ONE savings and checking bundle. Customers can get up to 4.31% APY on savings and 0.51% APY on checking.
• Newtek Bank: Offers rates of 4.20% APY, with no account minimums or fees

When switching makes sense and when it doesn’t

You may decide it makes sense to switch to digital banking if you have substantial savings and want to maximize the interest your money earns. By switching to a high-yield savings account through an online bank, you may qualify for a substantially higher interest rate than your current APY.

But be careful about aggressively chasing rates, especially if online banks are offering promotional rates. If you're looking for a long-term banking solution, it's important to make sure that the services available and the overall convenience the bank offers truly match your needs. Consider the types of accounts you need and your banking priorities when deciding if an online bank is right for you.

It's common to be worried about the safety of online banking, especially since you won't initially go to a physical branch to open your account and make your first deposit.

Be sure to choose a bank that is FDIC insured. FDIC insurance applies whether the bank is online or brick-and-mortar, and in case of a bank failure, FDIC insurance protects your money up to at least $250,000.

How to decide if an online bank is right for you

Digital banking offers many perks, including higher interest rates than traditional savings accounts provide. But those perks come with trade-offs, including the lack of in-person customer service, cash deposits that can be a hassle and potentially varying rates.

If you're considering switching to online banking, take some time to research each bank and its available products. Compare the current rates and review the fee schedule to understand the potential costs involved and any minimum balance requirements.

You can also take advantage of digital banking interest rates with a hybrid approach. Consider opening a savings account with a digital bank, but also leave your other accounts in your current bank open, too. You can try this hybrid approach to see how well digital banking works for you.

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