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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At its June meeting, the Federal Reserve voted to pause interest rates in the 3.50% to 3.75% range yet again. This latest in a series of pauses has left savers in limbo.

With inflation topping 4% and most 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 value 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 the outlook for both inflation and future Fed rate moves uncertain, your best bet right now is a short-term CD so you can lock in today's rate while still having flexibility to shift your cash somewhere else depending on where the market goes.

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.

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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.

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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 don't think your purchasing power is the same as it was even a few months ago, you're not alone. The Bureau of Labor Statistics released its May CPI report, showing inflation rose 0.5% for the month, bringing the annual inflation rate to 4.20%, the highest it's been in three years.

Fuel costs remain the primary catalyst for these trends. As the conflict in Iran persists, expensive energy continues to inflate the price of everything from airfare to groceries.

What's more, if you're trying to shelter your cash from rising prices, it's hard to find many savings accounts outpacing the current rate. I'll show you the few savings accounts I found that will keep you ahead of inflation, what the inflation number means for Federal Reserve policy and other steps you should consider.

These are the savings accounts outpacing inflation

Letting your cash sit in a savings account that doesn't outpace inflation means you're losing money every day, and these days, it's nearly impossible to find a savings account that does outpace inflation.

Your best option is a jumbo CD, the only CD type offering rates that outpace inflation at its current level. As its name implies, a jumbo CD requires a larger deposit, usually $50,000 to $100,000. The good news is that many of the maturity windows fall within six months to a year, giving you time to earn thousands of dollars effortlessly, with the flexibility to pivot if prices continue to rise.

With this in mind, here are two accounts to consider, both requiring $100,000 minimum deposits, and both with rates higher than the current inflation rate:

• ECFU Financial: 6-month CD at 4.35%
• ECFU Financial: 1-year CD at 4.35%

Another option I would consider is 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. While it won't keep you ahead of inflation, you'll at least break even.

The benefit of this account is that you build your savings without tying your money up as you would with a jumbo CD. It makes this account perfect for those looking to build an emergency fund or to achieve short-term savings goals with cash flexibility. Plus, if inflation continues to rise, the Federal Reserve might have to look at raising rates, 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. The Fed meets on June 16-17, with the CME Group FedWatch projecting a 96% probability they'll leave rates alone.

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

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. Unless something changes in the Middle East, "gasoline and other fuel prices will continue rising in the coming months," writes David Payne, staff economist and reporter for The Kiplinger Letter, in the Kiplinger inflation outlook.

"Food prices will also start rising in the future, as one-third of the world's fertilizer supply is produced in the Persian Gulf region, along with 10% of aluminum, used in everything from jets to soda cans." If core inflation continues to rise, it might make the Fed consider a rate hike to help bring inflation down to its intended target.

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's the only one earning the same rate as 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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• Kiplinger Inflation Outlook: Energy Cost Increases Not Done Yet

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.

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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.

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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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.

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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.

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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.

Ready to start saving now? Use the tool below, powered by Bankrate, to explore and compare some of today's top savings account offers:

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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 May 26, 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 healthcare and consumer staples, where investors are currently "underexposed," says SoFi's Thomas.

Our favorite diversified healthcare 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, five, 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 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 stock 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 33% 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 38%. Its 10-year annualized return, 11%, isn't shabby, either. Both trailing returns outpace the MSCI EAFE Index of stocks in foreign developed countries.

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, healthcare 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 you're 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 3.8%). "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 3.9%; Fidelity Investment Grade Bond (FBNDX), which yields 4.0%; and the Vanguard Core Bond ETF (VCRB), 4.7%.

An intermediate-term government fund we like is Vanguard Intermediate Term Treasury (VFITX), which is actively managed and yields 4.0%.

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 4.3% — it's a member of the Kip ETF 20 — and Vanguard Short-Term Federal (VSGBX), which currently yields 3.5%.

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 13.8% 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 6.4% 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 July Series (PJUL) in late June, for instance. It protects you against the first 15% in losses in the S&P 500 between the start of July 2026 and the end of June 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 ended in April 2026 was 13.1%, 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 March, the fund’s three-month cap on gains was 2.1% (which implies an annualized cap of more than 8% 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 25.4% annualized, beating 99% 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, 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 4.1%, and the actively managed fund Vanguard GNMA (VFIIX), which yields 3.7%.

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.

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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.

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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'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.

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Question: I'm retiring in a few years and want to reallocate around $100,000 to a less risky investment. Which savings account would work best for me?

Answer: There are several solutions in which you can earn thousands of dollars risk-free in a year. 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.

Use this Bankrate tool to shop for the right savings fit:

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 even if gas prices revert to where they were, he thinks inflation will rise to 3.0% by the end of the year due to rising health care costs and tariffs' impacts.

If the Fed cuts rates later this year and inflation continues to rise, it'll squeeze your earnings. With a HYSA, you won't have to worry about any early termination fees. You can make adjustments as needed, keeping you ahead of the game so you don't feel the pinch.

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: The Federal Reserve will have a new chair in May. President Donald Trump nominated Kevin Warsh to the post. Provided the Senate approves his nomination, he'll take over for Jerome Powell. If they don't, Powell will fill in on an interim basis.

This matters because Warsh has stated previously that interest rates should be lower. However, the Fed has a delicate balancing act as inflation continues to rise and the job market continues to be weak, so there might not be a rate cut this year. Even with the uncertainty, now is a great time to lock in one of the highest APYs without having to worry about Fed policy.

Which savings account earns me more?

Here's how much you can earn with each savings option:

Using this example, a jumbo CD will earn the most money. 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 if the Fed cuts rates later this year.

However, the earnings difference isn't substantial. Either way, you're going to earn at least $4,000 effortlessly in a year with access to your cash. Therefore, your cash liquidity and short-term goals will direct the course to help you choose the best option for your needs.

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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.

Related Content

• Part 1: The Best Money Advice of All Time
• Part 3: The Best Retirement Advice of All Time
• Part 4: The Best Family Finance Advice of All Time
• Part 5: The Best Money Advice Mom and Dad Gave These Experts
• 5 Tips to Get Your Kids Investing as Soon as Possible

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.

Related Content:

• Savvy Savings Moves to Make Now – Or You Could Lose Thousands
• Why Most Millionaires Don't Feel Wealthy — and What It Really Takes to Feel Financially Secure
• 5 Rules to Start Investing as a New Mom

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.

Related Content:

• Savvy Savings Moves to Make Now – Or You Could Lose Thousands
• Are You Making These 3 Savings Mistakes?
• How to Keep Your Savings Safe

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.

Related Content

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• Savings Calculator: If You Saved $5,000 Five Years Ago, Here's What You'd Have Now
• 7 Signs You’re Secretly Getting Rich (and Don’t Even Know It)

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.

Related content

• See Our Best Jumbo CD Rates
• Here's How Much You Can Earn with a $100,000 Jumbo CD
• Do You Have a CD Maturing Soon? Here's What to Do Next

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.

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 CD with SchoolsFirst Federal Credit Union, at a current APY of 4.00%. After five years, you would earn $21,665.29.

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.

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 4.35% APY with minimal fees, a high-yield savings account is a great way to stay ahead of inflation and reach savings goals.

Use this Bankrate tool 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
• Here's How Much You Can Earn with a $100,000 Jumbo CD

When the Federal Reserve holds interest rates steady, 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: 4.5% 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.

For larger cash reserves, rate differences can translate into thousands of dollars in additional earnings over time.

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 explore and compare some of 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.

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.

Related Content:

• If You Put $500 in a CD for 5 Years, Here's How Much Money You'd Have
• How to Keep Your Savings Safe
• 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.

Related content

• Where to Store Your Cash in 2026
• Why Your Bank Suddenly Lowered Your APY — And What to Do Next
• Best No-Fee High-Yield Savings Rates: January 2026

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.

Related content

• 3 Ways Kevin Warsh Will Change the Fed
• The Best High-Yield Savings Accounts
• What's Next for the Fed — as an Institution?
• Keep Ahead of Rising Prices with the Best One-Year CD Rates
• Kiplinger Interest Rates Outlook

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.

Related content

• Where to Store Your Cash in 2026
• Seven of the Best Budgeting Apps to Use
• Kiplinger Interest Rates Outlook: Federal Reserve Cuts Rates and Now Will Take a Pause
• Do You Have a CD Maturing Soon? Here's What to Do Next

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. This is vital; the latest CPI report shows the Consumer Price Index rose 3.8% year-over-year.

It means you'll need to find someplace to store your cash where it earns more than inflation, which CDs accomplish currently. Therefore, 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.

You can find and compare some of the best options using this Bankrate tool:

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 410% 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 haven't had significant drops since the Fed's cuts last year.

There's no guarantee that it will stay that way, as some banks can take months to adjust after the Fed cuts rates. So far, you can earn APYs as high as 4.35%.

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.

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• Where to Store Your Cash in 2026
• Should You Renew Your CD?
• Kiplinger Interest Rates Outlook: Long-Term Rates to Edge Up Until War’s Inflation Risk Eases
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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:

Related content

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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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After you put money in a certificate of deposit, you can sit back while it collects interest over its term. Once it reaches maturity, you’ll face a decision: Renew it or withdraw the funds.

Typically, you have a grace period of about seven to 10 days after a CD hits its maturity date to decide what to do. Your bank may send you a notification a few weeks before the certificate matures.

When you open a CD, it’s also a good idea to put a reminder on your calendar of when the certificate is nearing the end of its term. With this in mind, we'll explain what happens if you miss your grace period, whether now is a smart time to renew with rate cuts and where to find the best CD and savings rates.

What happens if I miss my grace period?

If you don’t act during the grace period, most banks will automatically reinvest the funds into a CD with the same term or a similar one, and the interest rate will typically match what the bank is offering for that maturity on new CDs.

Whether you should renew depends in part on how you’d like to use the money. If you don’t need the cash now, reinvesting may make sense as part of your longer-term savings plan.

Evaluate the interest rate. "Rates on top-yielding CDs are still outpacing inflation," says Ted Rossman, senior industry analyst at Bankrate.

How Fed policy impacts savers

However, as the Federal Reserve lowers short-term rates — it made cuts of a quarter-point in September, October and December, with more reductions likely on the way — CD yields also fell.

If you have a CD coming up for renewal soon, you may want to reinvest in a high-yield certificate, whether from the same institution or a different one, to lock in the yield before rates drop further.

We’ve listed top-yielding one- and five-year CDs (check the institution’s current rates before you invest).

The best one-year CD rates

The best five-year CD rates

You can also compare rates at depositaccounts.com/cd.

If you’d rather not commit to a CD but need a place to park your cash, consider a high-yield savings account.

Best high-yield savings accounts

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.

Related content

• Best CD Rates — A Risk-Free Way to Save
• Are High-Yield Savings Accounts Still Outpacing Inflation?
• Best High-Yield Savings Accounts

Having a flexible plan is a wise way to handle an uncertain future, especially with inflation rising. The latest CPI report showed inflation increased 3.8% year-over-year, meaning that if you have your cash in an account earning less than that, you're losing money.

With the Iran conflict showing no signs of slowing, crude oil prices will remain high, putting the squeeze on budgets. Thankfully, you don't have to play defense.

There are things you can do to stay on course to reach your goals. Here are smart, actionable steps to get started.

Reassess your cash flow with these budgeting apps

Let's start with the basics. It helps to have a fresh perspective on your finances, as it clues you in on where your money is going, and it might present some savings opportunities you missed before.

The best budgeting apps also make it easier to manage your finances, even if you have multiple accounts with different banks. Having this information at your fingertips is integral for ensuring you reach your goals. If you want a new one to try out, here are some of our favorites:

• Empower. This is a great app for investors and savers alike. The platform is easy to use, and you can integrate your personal and investing accounts within minutes. What I like about it is that you can also add other financial accounts to gain a fuller picture, such as 529 accounts, mortgage and more. Download the app for free on Google Play or the App Store.
• Honeydue. Staying on the same financial page as a spouse or loved one can be difficult with life's hustle and bustle. Take the guesswork out of it with the Honeydue app. What's beneficial is that you can track all expenses on joint accounts, giving you both a complete overview of shared accounts. Best of all, it's free.
• Monarch Money: I like this app because I can manage multiple accounts in one hub and set savings goals. I can even share these goals with my spouse to help us stay on track to reach our savings goals easily.

Build a financial safety net for life's surprises

Life has a way of throwing financial surprises. An unexpected bill or job loss can seriously challenge even the savviest of budgets. It's why having an emergency fund is a smart move.

I built mine using a high-yield savings account, because the best high-yield savings accounts (HYSAs) offer APYs above 4%, which made it easier to grow my balance quickly. I would set automatic transfers from my checking to my savings on payday and leave that money in savings alone. If you go with an online bank, you won't have to contend with monthly fees or minimum balance requirements.

The other thing I like is that, although they have variable interest rates, we likely won't have any rate cuts this year. And if inflation continues to rise, there might be a chance of a rate hike, which could increase your APY.

Explore options quickly using this Bankrate tool:

Another reason I like HYSAs is that you can separate funds from your regular accounts. This gives you less incentive to dip into your savings for impulse purchases.

Achieve savings goals without worrying about rate cuts

If you don't want to worry about the Fed's policy and your emergency savings are at a comfortable level, another option to consider is a certificate of deposit (CD). A CD differs from a high-yield savings account in that you receive a fixed interest rate.

What I like about CDs is that they require patience and discipline, making them a smart option for short-term to immediate savings goals. I've used them, and they help me reach my goals because withdrawing money before your term ends results in costly fees, which can deplete your earnings. I dislike losing money.

Whether you're planning a wedding for your child next year or taking a vacation in two, CDs can help you reach your goals and maximize your earnings.

You can find some of the best CD rates using this Bankrate tool:

One thing to consider is that many banks automatically renew your CD. You'll have a grace period after (usually a week to 10 days) if you change your mind. Set a reminder on your phone at least a week before the maturity date to consider other options.

Accelerate your journey to retirement success

A fresh perspective not only helps with your day-to-day expenses. It can also help you determine if your current investments and contributions will help you reach your retirement goals.

On this end, a broker might be a smart option, even to review your current investments, ensure your choices align with your risk profile, and you're on track to reach your goals. Kiplinger reviewed different brokers to help you find some of the best options. Here are two worth considering:

• Fidelity: Fidelity is a perennial Kiplinger readers' favorite, thanks to its full advisory services, the lowest fees you'll find from a brokerage and a great mix of retirement planning tools.
• Interactive Brokers: Kiplinger ranked them high thanks to a great mobile app, an ample array of investment choices and educational resources. With more than 160 emerging markets, it's perfect if you're looking for international markets.

Conquer your year end goals and stay ahead of inflation

With market volatility and inflation shaping the financial landscape, reevaluating your cash strategy is essential.

Whether you prioritize the flexibility of a high-yield savings account, the stability of a CD or the growth potential of a brokerage, the objective remains the same: Ensure your cash works as hard as you do. Refrain from letting your savings sit idle; take a few minutes this week to compare rates to shield your cash from inflationary pressures.

Related content

• Are High-Yield Savings Accounts Still Outpacing Inflation?
• Kiplinger Inflation Outlook: Energy Cost Increases Not Done Yet
• The Best Budgeting Apps
• Do You Have a CD Maturing Soon? Here's What to Do Next
• Best High-Yield Savings Accounts

Question: I’ve got $10,000 from my year-end bonus, and I want to keep it safe but still earn something. Is a CD or a money market account the smarter move?

Answer: It’s a natural question to ask right now. With your bonus in hand and interest rates slipping after the Fed’s rate cuts this year, deciding where to put that $10,000 can feel surprisingly tricky.

Certificates of deposit (CDs) and money market accounts (MMAs) remain two of the safest, most popular options. Both offer FDIC/NCUA insurance, both earn interest and both protect principal. But the best choice for your $10,000 depends heavily on two things: timeline and liquidity.

Let’s break down how these accounts work today, including updated earning tables, so you can choose the smarter home for your year-end bonus.

What’s the main difference between a CD and a money market account right now?

The main difference between a CD and a money market account right now is rate certainty versus rate flexibility. A CD locks in a guaranteed APY for a set term (anywhere from three months to several years). No matter what the Fed does next month or next quarter, your rate won’t change. That predictability is valuable in a declining-rate environment like the one we’re entering.

A money market account, however, has a variable rate. APYs can adjust up or down depending on market conditions and bank pricing decisions. For savers who want liquidity and the ability to move funds anytime, MMAs offer more flexibility.

How do liquidity and access differ?

CDs restrict access while money market accounts don’t. With a CD, withdrawing before maturity typically triggers an early-withdrawal penalty. That makes CDs better for money you know you won’t need for a set amount of time.

Money market accounts allow withdrawals and transfers as needed. While some banks impose monthly transaction limits, you can generally access your cash penalty-free, making MMAs ideal for near-term goals or emergency-adjacent savings.

Are both options equally safe?

Yes, as long as you stay within insured limits. Both CDs and MMAs are insured up to $250,000 per depositor, per institution, through the FDIC (banks) or NCUA (credit unions).

In terms of safety, they’re essentially identical.

How much a $10,000 CD earns at today's best rates

CD rates have drifted down slightly following recent Fed action. But some terms like one-year CDs remain competitive.

Earnings assume interest is compounded annually.

The biggest advantage here is the certainty: once you lock in a CD, the rate is yours regardless of economic shifts. If the Fed cuts again, as many expect, today’s 12-month yields may look unusually attractive compared with what banks offer three or six months from now. For savers wanting predictability, that’s a major benefit.

How much a $10,000 money market account earns right now

Money market accounts remain competitive even as rates cool, with many high-yield MMAs still offering around 4.25% APY. Because the rate is variable, earnings calculations below assume monthly compounding and no changes to APY over the period.

What stands out is the combination of liquidity and competitive returns. While a money market account can’t guarantee the rate won’t slip, it gives you significantly more flexibility.

Many banks also offer these accounts with low monthly fees, making them accessible for everyday savers. For short-term horizons, especially under nine months, today’s best MMAs earn slightly more than comparable CDs.

Use the tool below to quickly explore and compare some of today's top savings account offers:

CD vs. money market account returns compared

Below is how the two products compare head-to-head across common savings timelines:

Across most terms, the money market account slightly outperforms the CD, with the largest edge appearing over longer periods as compounding works in its favor.

The notable exception is the one-year CD, which is currently offering elevated rates that many analysts expect won’t last. If you’re attracted to locking in one of the last remaining CD terms with a “4-handle,” this is the window.

When a CD makes more sense

A CD is most effective when you value rate protection and you’re confident you won’t need to touch the money. For people with a fixed savings goal like an insurance premium due next year, a future home improvement project, tuition savings or wedding costs, a CD gives you exact, predictable earnings without requiring active management. CDs also make sense right before a rate-cut cycle.

Locking in a higher APY shields you from the declines we often see in variable-rate products after the Fed shifts its policy stance. If you’re someone who finds peace of mind in structured savings and guaranteed outcomes, a CD delivers clarity at a time when interest rates are in flux.

When a money market account makes more sense

A money market account is the better choice when liquidity or flexibility is your priority. This is ideal for savers who want their bonus accessible at any moment whether for emergency expenses, a home repair, a flight deal you can’t pass up or simply because you prefer not to lock up your cash.

While MMAs don’t guarantee the rate won’t drift lower, they still tend to retain strong competitiveness, especially in the online banking sector where promotional APYs remain plentiful.

If your timeline is short or uncertain, or if you’re looking for a place to keep cash while evaluating potential investment opportunities, an MMA lets you earn a solid return without sacrificing access.

How to decide between the two

The simplest way to choose is by assessing your timeline and your liquidity needs. If you know with certainty that you won’t need the money for at least 12 months, a CD may offer a slightly higher return with rate protection. If you’re unsure about your plans or may need access at any point, the money market account is the safer, more flexible pick.

You should also consider how sensitive you are to rate changes. If locking in a guaranteed APY brings peace of mind, that’s a strong argument for a CD. If you’re comfortable with the variability and you prefer being able to move money freely, an MMA offers the better balance of return and accessibility.

Final takeaway

If you’ve received a $10,000 year-end bonus, you’re entering 2026 with options. Both CDs and money market accounts are safe, federally insured, and deliver attractive yields compared with traditional savings accounts.

In today’s environment, the money market account typically comes out ahead for most time frames thanks to its liquidity and strong APYs, while the one-year CD remains a standout for its combination of guaranteed yield and rate certainty.

The right choice ultimately comes down to how soon you’ll need the money, how much flexibility you want, and whether locking in a rate before the Fed’s next move aligns with your financial strategy.

Related Content:

• Why a 5-Year CD is Your Best Bet After the Fed Meeting
• Best One-Year CD Rates
• Money Market Account vs High-Yield Savings Account

Some investors have owned Series I savings bonds (I bonds) for many years, and the 30-year maturity date might be approaching. Others bought Series I savings bonds in recent years to insulate their portfolios from inflation and the ups and downs in the stock market.

Whether you are a recent investor in I bonds, have owned them for many years, or are pondering adding them to your investment portfolio, you should be aware of the federal income tax rules.

I bonds have important tax advantages for owners. Interest earned on I bonds is exempt from state and local taxation. Also, owners can defer federal income tax on the accrued interest for up to 30 years.

These rules might seem simple at first. But they're not as straightforward as you think, and they can get complicated pretty quickly.

For example, the tax treatment of I bonds varies depending on who owns the bonds, whether you gift the bonds to someone else, and, in some cases, how the bonds are used. Following are descriptions of how and when I bond interest is taxed under federal law in eight common situations.

Note: For people who own EE bonds, the federal income tax consequences are identical to those of I bonds. So this story is also applicable to you.

1. Tax rules when you own I Bonds

I bond buyers have a choice when they acquire the 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.

However, 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.

2. How to report and pay taxes if you choose to report I Bond interest annually

Some I bond holders may want to report their interest annually and pay income tax each year rather than wait until they cash in the bonds or the bonds mature. But you won't get a Form 1099-INT every year. You will only get the 1099-INT when you cash in the bonds or when the bonds mature, whichever is earlier.

So how do you know how much interest to report each year? If you own the savings bonds through your online Treasury Direct account, you can see the interest earned each year in the account. If the savings bonds are on paper, you can use the savings bond calculator on Treasury Direct's website to help you figure out the interest to report.

You would report the interest each year on line 2b of your Form 1040. If you received $1,500 or more in interest during the year, you would also fill out Schedule B and attach it to your tax return.

3. How to report and pay taxes when you cash in I Bonds or they mature

If you cash in I bonds this year, you would report the interest on line 2b of your 2026 Form 1040 and pay tax to the extent you didn't otherwise include the interest income in a prior year. If you received $1,500 or more in interest during the year, you would also fill out Schedule B and attach it to your tax return.

If you keep the I bonds through the date they mature, generally 30 years, and you didn’t otherwise include the interest income in a prior year, you will be taxed on all the accrued but previously untaxed interest in the year of maturity, whether or not you cash them in. You would report interest income on your Form 1040 in the same manner as if you cashed in the I bonds.

If you are using the bond proceeds to pay for higher education, some of the interest may be exempt (see "Using I Bonds for Education" below).

4. Tax implications of co-owned I Bonds

For I bonds issued in the name of co-owners, such as a parent and child or grandparent and grandchild, the interest is generally taxable to the co-owner whose funds were used to buy the bonds.

However, that co-owner can choose to defer paying tax on the interest or report it annually. This is true even if the other co-owner redeems the bonds and keeps all the proceeds.

5. Gifting I Bonds

Savings bonds make great gifts. If you buy I bonds for someone else, such as your children, grandchildren or any other person, the interest is reportable by that person, provided the bonds are titled in his or her name. Just like any other holder of I bonds, the recipient can choose to defer paying tax on the interest until the earlier of the year the bonds mature or are cashed in, or he or she can report the interest annually.

What if you already own I Bonds and are thinking about gifting the bonds you own to a family member or other person? Gifting 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. 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.

6. Donating I Bonds to charity

Donating an I bond before it matures to charity while you're alive will also accelerate taxation of the interest income. As with gifts to other people, giving away bonds you already own to your alma mater, favorite museum or other charitable organization doesn't let you avoid the tax on previously untaxed interest. You're still taxed on all that interest in the year the donation is made.

7. Inheriting I Bonds

If you inherit I bonds that haven't yet matured, who is taxed on the accrued interest that went untaxed because the original owner deferred the interest? It depends. The executor of the 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 post-death 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, again whichever is earlier.

8. Using I Bonds for education

One way to avoid paying federal income tax on accrued I bond interest is to cash in the bonds before or on the maturity date and use the proceeds to help pay for college or other higher education expenses for you, your spouse or your dependent. But there are lots of rules and hurdles to jump over to be able to take advantage of this tax perk. For instance:

• 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 can't use this tax break to help pay for their grandchild's college tuition unless the grandparent can, on their 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 (modified AGI) of more than $152,650 for joint filers and $101,800 for others and is completely phased out at modified AGI of $182,650 for joint filers and $116,800 for other filers.

The term modified AGI has many different definitions, depending on what tax break you are using it for. For purposes of the exclusion of I-bond interest to pay for college education, modified AGI starts with the AGI on line 11 of your Form 1040 (figured without taking into account any I-bond interest exclusion). Then one adds back tax breaks from living abroad, the exclusion for employer-provided adoption assistance, and any deductions for student loan interest.

If the proceeds from all savings bonds cashed in during the year exceed the qualified education expenses paid that year, the amount of interest you can exclude is reduced proportionally.

Use IRS Schedule B and Form 8815 to report and calculate any excluded I bond interest used for education.

Related

• Are I Bonds a Good Investment? Pros and Cons
• The Current I Bond Rate is Mildly Attractive: Here's Why
• Types of Income the IRS Doesn't Tax

You can save more for retirement this year, thanks to an increase in the 401(k) contribution limit for 2026. The IRS adjusts contribution limits and other tax provisions for inflation each year.

High inflation as of late means this is the fourth year in a row that the adjustments have resulted in a higher 401(k) contribution limit. But what about your IRA?

Here’s how much you can contribute to retirement accounts in 2026.

IRA 2026 contribution limits

The contribution limits for a traditional or Roth IRA increased last year and will increase again for 2026.

• You can contribute a maximum of $7,500 (up from $7,000 last year).
• Catch-up contributions for taxpayers 50 and older are also subject to cost-of-living adjustments, and these limits have also increased for 2026 to $1,100 ($8,600 total).

However, not everyone can make the maximum IRA contribution limits this year. You can only make the maximum contribution to your Roth IRA if your modified adjusted gross income (MAGI) is below the threshold set for the year.

• For 2026, single and head-of-household filers with a MAGI below $153,000 (up from $150,000 last year) can contribute the full $7,500 in 2026.
• The maximum contribution is reduced for these filers if their MAGI is between $153,000 and $168,000, and these taxpayers can't contribute to a Roth IRA at all if their MAGI exceeds $168,000.
• For married couples filing jointly, the income phase-out range for 2026 is from $242,000 to $252,000 (up from from $236,000 to $246,000 last year).
• Joint filers with a MAGI below $242,000 can contribute the full $7,500 for 2026, but these filers cannot contribute anything to an IRA with a MAGI greater than $252,000.

(Note: The above income limits do not apply to traditional IRAs.)

401(k) limit increase for 2026 contributions

Contribution limits for 401(k), 403(b) most 457 plans, and the federal government's Thrift Savings Plan will increase by $1,000 for 2026. Eligible taxpayers can contribute $24,500 to these accounts in 2026 (up from $23,00 last year).

The contribution limit for SIMPLE plans increases to $17,000 this year (up from $16,500 last year). Similarly, participants of an applicable SIMPLE plan might be able to contribute a higher amount of $18,100 (up from $17,600 last year).

401(k) 2026 catch-up limit

There's an increase in catch-up contribution limits for taxpayers 50 and older for 2026. These taxpayers will be able to contribute an additional $8,000 in 2026 ($32,500 total).

However, under SECURE 2.0, a higher catch-up contribution limit applies for those age 60 to 63 beginning this year. (Participants in that age range could contribute an additional $11,250 instead of $8,000.) The total potential contribution amount for these taxpayers is $35,750.

For more information, see Kiplinger's report: 'Super Catch-Up' Contribution for Ages 60-63.

The catch-up contribution limit for employees age 50 and older who participate in SIMPLE plans also has increased for 2026, to $4,000 (certain applicable plans might have a contribution limit of $3,850).

But under a new change under SECURE 2.0, those who are 60 to 63 can contribute more to SIMPLE plans, ($5,250) for 2026.

IRA deduction phase-out thresholds for 2026

If you put money in a traditional IRA, you might be able to take a tax deduction for some or all your contributions. (There is no deduction available for contributions to a Roth IRA.)

However, the deduction is gradually phased out if your income is above a certain amount.

Here are the phase-out ranges for 2026.

• For single taxpayers covered by a workplace retirement plan, the phase-out range is from $81,000 to $91,000 (up from from $79,000 to $89,000 last year).
• For married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is from $129,000 to $149,000 (up from $126,000 to $146,000 last year).
• For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the phase-out range is from $242,000 to $252,000 (up from from $236,000 to $246,000 last year).

If you are married and filing a separate return (and covered by a workplace retirement plan), the phase-out range remains from $0 to $10,000 because this limit is not subject to a cost-of-living adjustment.

Saver's Credit income limit for 2026

Americans with lower and middle incomes who contribute to a retirement plan can claim the Saver's Credit on their federal tax return, which could lower their tax bills.

However, not everyone qualifies. Here are the new income limits for claiming the Saver’s Credit in 2026.

• $80,500 for married couples filing jointly (up from $79,000 last year).
• $60,375 for heads of household (up from $59,250 last year).
• $40,250 for single and married taxpayers filing separately (up from $39,500 last year).

Read More

• 2026 HSA Contribution Limit: What You Should Know
• Saver's Credit: Who Qualifies for This Retirement Tax Break?
• New 2026 Income Tax Brackets Are Set

If you have an individual retirement account (IRA), you might have considered converting it into a Roth account at some point. But you might not know the best time to do a conversion, or even if doing so would benefit you.

The immediate tax trade-off from an IRA to a Roth is relatively clear: With a traditional retirement account, you pay taxes when you take a distribution; with a Roth, you pay taxes now on the funds you contribute.

Converting to a Roth means you must pay the income tax on contributions in the year of conversion. Still, the potential tax benefits could be worth the upfront cost, especially if one of the following scenarios applies to you.

Here are six tax reasons you may convert your IRA to a Roth — and when you probably shouldn’t.

Roth IRA tax benefits

1. Get tax-free growth and withdrawals in retirement with a Roth

One major reason to convert your traditional IRA or 401(k) into a Roth is for tax-free growth. Because taxes are paid on your conversion upfront, all future qualified distributions are withdrawn tax-free, leading to significant trickle-down benefits.

• For example, once you reach age 65, you might have to pay Medicare’s income-related monthly adjustment amount (IRMAA). This amount is based on your modified adjusted gross income (MAGI). Because tax-free Roth earnings are excluded from your MAGI, you might avoid higher Medicare premiums on your retirement income.
• Other taxes, such as those on capital gains and the net investment income tax (NIIT), depend on your MAGI in the year of withdrawal. By withdrawing future earnings tax-free with a Roth, you might indirectly minimize or even avoid these taxes altogether.

Timing your Roth conversion is also important for maximizing tax-free growth. For example, you can convert to a Roth when the market is down and your IRA balance is temporarily low. This allows you to pay the tax on a smaller valuation, so when the market inevitably rebounds, your tax-free earnings might more easily recoup your upfront conversion tax bill (more later on conversion timings).

2. Set up flexible retirement income with Roths

Roth conversions from a traditional IRA account might also be ideal for those who want the final say in how they spend their retirement savings account income.

With a traditional IRA, Uncle Sam dictates when and how much you need to withdraw from your retirement account every year.

With a Roth, you’re not forced to take out a certain distribution during specific years, meaning you can freely avoid late-withdrawal penalties and flex your retirement account savings.

However, before your Roth IRA earnings become entirely tax-free and penalty-free, you must meet two requirements for a qualified withdrawal:

1. The 5-year rule. Your Roth IRA must have been open for at least five full years.
2. The age or life event rule. You must be at least 59½ years old, or the withdrawal must be due to disability, a first-time home purchase (up to $10,000), or death.

If you withdraw the earnings before you meet the rules above, that money could be subject to both income tax and a 10% early withdrawal penalty. But by flexing your retirement IRA distributions, you can make strategic withdrawals and help manage your taxable income, even lowering your federal tax bracket altogether.

Roth conversion timing

3. Take advantage of a low tax bracket with Roth accounts

The final months of the year are often the most popular time to execute a Roth conversion. Why? By late fall, most taxpayers have a firm grasp of their projected taxable income and, consequently, their federal tax bracket.

If you expect this bracket to be lower than the one you'll be in future years, converting your IRA to a Roth now could be advantageous. This strategic move allows you to lock in a lower tax rate and significantly reduce your immediate tax bill on the conversion.

If you're fortunate enough to have a lower tax bracket in 2025 than you anticipate in the future, here are the specific times and scenarios when converting your traditional IRA into a Roth might make sense:

• You’re not close to retirement. If retirement age is still 10 or more years away (and you expect to earn more in retirement), now might be a good time to convert your IRA to a Roth, so you can maximize your tax-free growth.
• You expect to live longer. Do you know any relatives who have reached their 90s and are still in good health? Required minimum distributions (RMDs) on traditional IRAs are calculated based on life expectancy tables, which might not fit your family’s expected lifespan. A Roth account offers lifetime tax-free savings, potentially providing a cushion of funds for many years.
• You’re retired and recently transitioned from married filing jointly to a single filer. Single filers generally have a lower income threshold for paying Medicare surcharges, making them susceptible to higher tax bills in the future. By converting to a Roth account, you can potentially avoid those higher tax brackets by preventing the Medicare surcharges on IRA distributions.

The most “ideal” time to convert to a Roth depends on a case-by-case basis, so consult a qualified tax professional before the conversion to see if it’s right for you.

4. Avoid RMD taxes with a Roth IRA

Retirees are likely already familiar with the concept of a RMDs. But if you’re new to the retirement game, here’s the scoop:

• RMDs are money that must be withdrawn from your 401(k), 403(b) or traditional IRA every year after you reach a certain age (right now, that’s likely age 73).*
• Failure to make the withdrawal typically results in a 25% penalty on the amount not distributed.

RMDs can increase your taxable retirement income in a variety of ways. For instance, they can raise the taxable portion of your Social Security benefits by increasing your provisional income or pushing your taxable income into a higher federal tax bracket.

A key advantage of converting to a Roth IRA is the lack of RMDs during the original owner’s lifetime.

Because Roth accounts typically don’t have RMDs, you might be able to avoid taking distributions from your Roth during years of high taxable income, while withdrawing more funds tax-free during low-tax years. This is particularly ideal for high-earners who anticipate higher tax rates in the future.

*Note: If you are 73 or older at the time of the conversion, you must first take your RMD from your traditional IRA in the year of the switch.

Retirement and Estate Planning for Roths

5. Start a Roth IRA after you retire to avoid future high tax rates

If you’re newly retired, now might be the optimal time to convert your 401(k), 403(b) or other traditional IRA into a Roth. Your tax bracket might be lower than it's been while you were working, and you’re not yet taking Social Security or are required to take an RMD (which can push you into a higher tax bracket).

This retirement “sweet spot” is when federal tax rates are at their lowest, which might help create a couple of ideal scenarios for a Roth conversion:

• For instance, if your pension or annuity hasn’t kicked in yet, now might be a great time to convert your traditional IRA or 401(k) while taxable income is low.
• If you plan to receive a large lump sum from an employee stock ownership plan (ESOP) or other retirement investment, converting to a Roth now could save you future taxes when your taxable income is higher.

As reported by Kiplinger, some financial planners also speculate that the changes made in the Trump/GOP 2025 tax and spending bill have placed taxpayers in “one of the lowest-income-tax environments in history.” If that applies to you, consider converting now to a Roth before future tax rates potentially increase.

For more information, check out Kiplinger’s report on Timing Roth Conversions.

6. Give tax-free assets as inheritance to your kids with a Roth

Withdrawals from a traditional IRA or 401(k) are always taxable, no matter who’s taking the funds. Unfortunately, that means your kids could pay the price if you leave them your IRA.

That’s where another tax advantage of converting your IRA into a Roth comes in handy: Your heirs could inherit those funds income tax-free.

Not only that, but inherited Roth earnings continue to grow tax-free, meaning your heirs have more flexibility on when to withdraw.

However, your nonspouse heirs generally have to withdraw all funds from an inherited Roth within 10 years of your death (this also applies to traditional IRAs and is commonly referred to as the 10-year rule). Once more, inherited Roth IRAs have RMDs for some heirs (such as children), though spouses who inherit a Roth might not be subject to RMD rules.

For more information on the 10-year rule and inherited Roth accounts, check out Kiplinger’s report, Inherited an IRA? Key Distribution Rules to Know for 2025.

When you shouldn’t convert to a Roth

Although we covered six tax reasons for converting your IRA to a Roth, there are times when a Roth conversion can be financially detrimental. Here are a few scenarios when you wouldn’t convert a traditional IRA to a Roth.

• You expect your 2026 income tax rate (or later) to be lower (or the same). If you think your future federal tax rate will be lower than your current rate, you might not want to convert a traditional IRA to a Roth, as doing so would mean paying higher tax rates later.
• You have to use IRA funds just to pay the conversion tax bill. Since the Roth conversion tax is due upfront, you must pay it immediately. If you're forced to use the IRA funds themselves to cover the tax bill, that withdrawal becomes taxable and could trigger an early withdrawal penalty (if you're under 59½). This might significantly diminish your retirement savings and undercut the primary benefit of the Roth: Tax-free growth.
• You need to use the converted funds within five years. If you’re under 59½, you can’t use your funds for five years after a traditional IRA to Roth conversion. Otherwise, you could be subject to a 10% early withdrawal penalty. (Yet if you’re older than 59½, you might withdraw the funds penalty-free before the five years are completed, though any earnings on those funds will be subject to income tax.)
• You’re retiring soon. If you’re retiring within the next five years, your Roth account will not have a lot of time to grow tax-free, so you might not want to convert your IRA into a Roth. Otherwise, your upfront conversion tax bill might never be recouped.

Deciding if and when to convert your traditional IRA to a Roth account should be part of a comprehensive tax strategy that considers your various income streams and retirement time horizon.

For example, converting to a Roth might seem like a good idea for generating tax-free growth, but the increase to your taxable income in the year of conversion could have ripple effects. Higher taxable income might preclude you from claiming tax breaks that you’re eligible for, such as the tip tax deduction or $6,000 bonus deduction for older adults.

You don’t have to make an IRA to Roth conversion all at once. You can decide to minimize the impact of your conversion taxes by spreading out a Roth conversion gradually, if at all.

Ultimately, Roth conversions are irreversible: Exercise caution. Once you’ve made one, you’re stuck with the upfront tax bill and the Roth account for a lifetime.

Read More

• Roth IRA Contribution Limits for 2025
• Retirement Changes to Watch in 2026: Tax Edition
• The Rubber Duck Rule of Retirement Tax Planning
• 3 Major Changes to the Charitable Deduction in 2026

Once you find a bank account you like, you rarely switch to another. The average person keeps the same account for 17 years, Bankrate found.

What causes this long-term loyalty? One reason is that switching bank accounts, especially checking accounts, can be complicated. You must update direct deposits and change every automatic bill payment you make. As a result, many people prefer not to go through the hassle of switching.

But is this loyalty costing you opportunities to earn better returns? This is where the trend of "soft switching" comes in.

Soft switching means trying a new bank while keeping your current one, with the option to close the old account later. This is something I know well because I did it, but before you rush to it or write it off, you should understand the benefits of soft switching and what to consider before making the change.

How I used soft switching to reach my goals

I was a big-bank customer for more than a decade, but as I was building up my savings, I found their interest offerings to be less than adequate. I was only earning a fraction of interest on my account holdings, so I explored the best high-yield savings accounts offered by online banks, which provided substantially higher annual percentage yields (APYs).

Instead of closing my big-bank accounts and transferring all my money to SoFi, the bank I wanted to try out, I opened a high-yield savings account (HYSA) with SoFi and left my old accounts open. From there, I set up automatic transfers from my old checking account to my SoFi savings every time a direct deposit was made.

The result? I was earning hundreds of dollars more annually with my SoFi high-yield savings account. After months of higher returns, I decided to open a checking account with SoFi as well, since it made accessing cash in my HYSA easier, and their checking account came with a 0.50% APY. From there, I closed my old big-bank accounts, completing the switch.

Why do people switch bank accounts?

If you're trying to make your money work better for you, switching bank accounts can be the smarter move in some instances. Say you have $10,000 in savings with your local bank, earning 0.02%. In the course of a year, you'll earn $2 on that account.

That's not optimal. Instead, if you take that $10,000 and open a high-yield savings account with Newtek Bank, you'll receive an APY of 4.35%. In the course of a year, you'll earn $444.57, giving you an extra $442.57 just for switching bank accounts.

Higher rates aren't the only reason people switch. Here are others:

• You've had bad experiences with your bank (high fees, poor customer service)
• You want access to better features (improved mobile app capabilities, responsive customer service)
• Avoiding fees, as some local banks offer accounts laden with them
• You want to take advantage of savings account bonuses
• You moved to a new city and don't want to use your old bank account
• Access to other accounts (CDs, money market accounts) with better returns

Reasons switching banks might not be a wise move

Switching might not work in certain scenarios. If you rely on a local branch to assist you with banking, then going to an online bank takes away that in-person help. For some, having that help is necessary to keep finances in line.

Another reason is that "soft switching" bank accounts requires considerable attention to detail. Until you make a full switch, you'll continue to manage multiple accounts from different banks, which can be overwhelming.

Only take this on if you feel comfortable managing everything. If you need assistance in this area, the best budgeting apps make it easier to manage your finances, especially if you have accounts at multiple banks.

A checklist for soft switching bank accounts

If you're interested in trying it out, here are some things you should do to make the process smoother:

• Do your research first: Ensure your new bank has an excellent reputation, offers accounts that meet your financial needs, and verify that accounts with sign-up bonuses don't come with higher fees.
• Make gradual shifts: When I started, I only opened a HYSA with SoFi and set up automatic transfers from my former checking account to fund and build it up over time. This gave me time to test SoFi's banking features, customer service and more to ensure it was a good fit for me.
• Create a list of automatic payments/deposits: This made switching my checking account more manageable because it gave me time to update everything when I wanted. I did this gradually over a few months to ensure I didn't miss any automatic payments before closing my older account. It also made the process much less stressful.
• Continue to shop around: I recommend shopping your savings account at least once per year. Doing this allowed me to find a better solution, which helped me reach some savings goals faster. You can use this Bankrate tool to find options fast:

The bottom line on soft switching bank accounts

The average person keeps their checking account for 17 years. Does that inertia cost you in the long run? It could, as many online banks offer substantially higher rates of return on savings accounts compared to their brick-and-mortar counterparts. This is where soft switching comes into play, as it allows you to try new bank accounts while maintaining your primary one.

The key is to take your time, research ample options to ensure you find the right one and make the switch gradually. Doing this makes the process less stressful and ensures you don't miss payments during the switch, while giving you access to the returns and features you deserve.

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Choosing the right savings account can be the difference between maximizing your potential and missing out on hundreds of dollars in earned interest. That's why once a year, I'll shop around to ensure my savings account continues to meet my needs, and there isn't one that might be better suited for my situation.

Now is an important time for savers to shop around. The Federal Reserve cut rates twice, and it may cut them again when it meets in December. As such, choosing the right account can help you stay on course for achieving your savings goals even with diminishing returns.

With this in mind, two options to consider have some commonalities. I'll compare how high-yield savings accounts and no-penalty CDs are similar, highlight the difference between the two and which one works best for your savings goals.

How does a no-penalty CD work?

Normally, when you open a CD, you pledge to keep the money in the account for a specified time period. But what happens if you need your money before the term matures? You could be on the hook for months of earned interest, depending on your CD term.

If you're worried about tying up your cash, one solution is a no-penalty CD. A no-penalty CD comes with terms ranging from six months to a year. However, unlike a regular CD, with a no-penalty CD, you can withdraw money once you reach the initial vesting period — normally, one week to a month.

Most importantly, no-penalty CDs come with a fixed interest rate, and many banks offer FDIC insurance to protect your investment further. If the Fed continues cutting rates, it won't impact you. The rate you lock in now is the rate you'll receive through your term.

Use the tool below to shop and compare CD rates quickly, powered by Bankrate:

Is a no-penalty CD a smart move for you?

I generally recommend no-penalty CDs to savers who already feel confident in their emergency fund. A standard emergency fund typically covers three to six months of expenses, but aiming for closer to a year gives you more breathing room if a job loss or unexpected setback occurs.

The reason comes down to maximizing your earnings. When you open a no-penalty CD, you lock in a fixed interest rate for the full term. However, if you end up withdrawing the money soon after opening the account, the CD will close, and those funds are no longer earning that fixed rate.

If the Fed cuts rates again and you move that money back into a high-yield savings account, you may end up with a lower APY than what you originally locked in. In that case, you miss out on the long-term benefit of securing a higher rate today.

Another thing to keep in mind about no-penalty CDs is that each bank treats them differently. Some will allow you to withdraw the entire amount once you reach your vesting period, while others permit one withdrawal per month. Therefore, they work best for established savers who want to grow some of their earnings with minimal risk.

Do you want an account recommendation? Climate First Bank offers a six-month no-penalty CD earning 4.34% APY.

Are high-yield savings accounts still a wise option?

I believe they are. I've been reviewing rates weekly on all savings accounts and have been surprised to find that some of the top accounts haven't issued rate drops. To demonstrate, Newtek Bank offers a high-yield account with a 4.35% APY. This rate has remained the same for the past few months, allowing savers to capitalize on higher returns for longer than other banks.

HYSAs are excellent savings vehicles for savers with short-term goals (think three months or less). If you're looking to earn some money for a few months to fund a project or a vacation, they're a great option to consider.

Many online banks offer them with no account fees or minimums and FDIC Insurance, making this an exceptional choice for short-term saving goals or for those looking to grow their emergency fund.

You can quickly compare some of today's best savings offers using this Bankrate tool:

Of course, there's something you must consider with high-yield savings accounts: They come with variable interest rates.

It means that if the Fed cuts rates again, your APY will dip. However, given that it takes some banks months to respond to Fed policy, you can still maximize higher rates if you act quickly.

Here's a breakdown of different scenarios and which of these two accounts works best in each:

The bottom line on high-yield savings vs no-penalty CD

For savers with shorter-term goals or needing to build an emergency fund, a high-yield savings account remains a wise option, as you'll earn an APY that outpaces inflation. You can also use them for any funds that require immediate liquidity.

Meanwhile, if you're an established saver who's looking for a slightly longer-term option, a no-penalty CD works the best. It offers a fixed interest rate, allowing you to lock in a rate now before the Fed cuts diminish it further.

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Question: I recently found out I was receiving $50,000 from a family member. My retirement is already fully funded, I have no debt to pay off, and I don't need to use the $50,000 for anything immediate. Where are some smart places to store it to keep ahead of inflation?

Answer: My first suggestion would be to invest it in an index fund since they offer historically higher returns than savings accounts. However, if you're concerned about market volatility, there are a few other solutions that would work best for you.

Depending on your savings goals, a high-yield savings account or finding the best CD rates are smart options to consider for large deposits of $50,000 or more.

Each approach helps you earn returns that outpace inflation while eliminating risk. I'll show you these scenarios to consider, depending on your investing or savings profile.

Scenario 1: I don't mind a little risk if there's a chance of a higher reward

I recommend investing in the stock market through an index fund, in the vehicle of an exchange-traded fund (ETF) or mutual fund, if you want high returns and are OK with some risk.

The advantage is diversification. If you choose an index fund that tracks the S&P 500, for example, that fund would hold the approximately 500 biggest U.S. stocks, rather than putting all your eggs in one company's basket. Index funds also have lower or no fees since they're passively managed.

There are a few considerations before diving in. First is that your return is not guaranteed. If the index performs poorly, your returns will decline, as well. As a point of reference, the S&P 500 has historically averaged about a 10% annual return.

The bigger concerns, though, revolve around timing. That 10% return is an average, meaning some years it's higher and some years it's lower or even negative. If you find yourself needing to use this money in a bad time for the market, you'll lose out on returns.

The other timing issue is the capital gains tax, which you'll have to pay on what you earned when you sell your holding: If you hold the index fund for less than a year before selling it, you'll be subject to short-term capital gains rates, which are higher.

Altogether, this means you should think carefully about whether you're OK with tying up this inheritance money for at least a year. If you're not sure, consider one of the other scenarios.

However, if you're willing to take some risk to maximize returns and are sure you'll hold the investment for more than a year, this would be a wise option.

Scenario 2: I want to park the cash and forget about it

If you're already on course to achieve your retirement goals, and you have a healthy amount in your emergency fund (at least six months of expenses), there's no reason to go with anything but a long-term CD.

While it's likely CDs won't earn you the same return as a low-risk ETF or other investment vehicle, they're lower-risk solutions for savers wanting to keep all their money. Now is the best time to lock one in, as rates are subject to change soon.

The Federal Reserve issued its second rate cut of the year at its meeting last week. Because it takes banks some time to adjust their rates, you can still find five-year CDs with rates higher than 4%.

Use this Bankrate tool to compare and find your best option quickly:

What happens if you need the cash before the CD matures? You'll pay a significant early withdrawal fee. On a five-year CD, your penalties could be anywhere from six months to one year of earned interest, equating to hundreds of dollars lost. Only do this approach if it works for your cash flow.

Recommended account. SchoolFirst Federal Credit Union has a five-year CD with a 4.15% APY. You'll make $11,272.61 in earned interest with a $50,000 deposit if you lock it in today.

Scenario 3: I want to earn a higher rate with cash flexibility

In an uncertain economy, it makes sense to prioritize flexibility. Inflation could continue to climb in 2026, and if the Fed continues to cut rates, eventually we'll reach the point at which you're not earning enough on your savings to stay ahead.

This is why I recommend a no-penalty CD. As its name implies, you'll have the flexibility to access your cash as you need it without the harsh fees. You'll need to keep your cash in for a week to a month at the start. You'll also want to pay attention to account terms, as some banks allow you to withdraw all of it after you reach the initial vesting period, while others allow one withdrawal per month.

The benefit of this approach is that you can earn a higher rate of return that'll outpace inflation. With terms between six months to a year, you'll have quick access back to your cash as well.

Recommended account. Climate First Bank offers a six-month no-penalty CD with a 4.34% APY, where you'll earn $1,073.48 in interest.

Scenario 4: I don't want to tie any money up

If you want access to your money at all times, a CD might not be the best fit. Instead, consider a high-yield savings account.

High-yield savings accounts differ from CDs in that they come with a variable interest rate. It means if the Fed decides to cut rates again, it could impact how much you can earn from one.

That said, now is an excellent time to sign up for one. I review rates weekly, and some accounts still have APYs far above 4%. Use this Bankrate tool to find the best savings account for you:

It's a great way to protect your $50,000 without having fees eat into it. Many of the best high-yield savings accounts come with no fees or account minimums. You can always sign up for a checking account to access funds quickly with a debit card, should you go with an online bank.

Recommended account. Newtek Bank offers the best rates at 4.35%, with no minimums or monthly fees. If you store $50,000 in it for a year without any rate cuts, you'd earn $2,222.86.

Ultimately, if you plan to receive a larger sum of money and have your retirement and emergency savings fully funded, these are the best options to consider. An index fund has the chance of the highest return but some risk, and of the guaranteed-return options, CDs will earn you the most over time as you can lock in rates while they're still higher.

However, it's also tempting to go with a high-yield savings account. While you run the risk of having rates lowered in the future, it also gives you flexibility to pivot to higher-earning investments if need be — or to spend the money when you decide to. Prioritizing your savings goals upfront can direct your path.

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