Managing your retirement savings in a challenging environment

Maximizing Retirement Investment Returns

by David Ogul,

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Managing your retirement savings to maximize investment returns has perhaps never been as challenging as it is today. CD, money market and savings account interest rates remain at record lows, leaving retirees struggling to earn much income from these traditional investments.

"The issues we have now are unlike anything we've seen in a long time," says Michael Lincoln, an investment advisor with Lincoln Capital, Inc., in San Diego. "It's just a really horrible, horrible time to be a retiree trying to maximize your investment income."

Still, the need exists to put your money somewhere as you plan for retirement. While none of these options is perfect, each is worth considering as part of your savings strategy.

Deposit Accounts

CDs pay more than most deposit products, but that's hardly saying much in today's low-interest environment. CD rates have plunged in recent years, and today's landscape has left even long-term CDs struggling to keep pace with inflation. Still, if you opt for a wise strategy, such as CD laddering, they can still be a worthwhile investment.

Savings and money market accounts have suffered a fate similar to CDs, but they too can still offer some interest in addition to their FDIC-backed security. The trick with these is to hunt for the best interest rates available, which are often several times higher than the national averages.'s America's Best Rates series highlights some of the top-performing accounts each quarter and can give you an excellent place to start your search.

Treasury Bills

Long-term Treasury bills may seem alluring since they offer higher interest rates than many short-term products. But as with deposit accounts, the current low-interest environment raises issues with these as well.

"Let's say you can get a 3 percent return on a 30-year Treasury bill," Lincoln says. "That may sound good now, but the problem is that's going to be the fixed rate on that bond for 30 years. What happens if the interest rates in a few years go up to 5 percent? You're going to be stuck with that 3 percent rate."

So be careful in choosing the term of any Treasury bills you choose. While interest rates aren't expected to rise in the short term, you don't want to be left out when rates finally do jump.


If you are no longer working or near retirement, you'll likely want to be conservative in your stock investments. If the market crashes, you may not have the luxury of waiting for it to rebound, as someone who's years away from retirement would.

That said, if you are a long way from retirement, you may see fit to be a little more liberal in your stock allocation. If you don't wish to handle individual stocks yourself, opting for a target date fund, an instrument that aims to coordinate the risk of your investments with your expected retirement date could be a good choice. Still, be aware of the risks of stocks, even in the short term. While you may have time to wait out some downturns, big losses can still set back your efforts.

Will you leave
thousands of dollars on the table
by taking Social Security
at the wrong time? Find out.

Determining Your Needs in Retirement

If you're nearing retirement and looking for a quick idea on how much you might need to live comfortably, a retirement savings calculator can offer a good starting point. But before using one, you'll want to know your desired retirement age and how long you expect to live (be liberal as people are living much longer today than in generations past).

Also crucial to your planning are your anticipated Social Security income, stock portfolios and pension accounts. A good rule of thumb is that you will need about 80 percent of what you were earning while working to live comfortably in retirement. So be prepared to make the concessions necessary in your financial planning to meet that target.

Planning for retirement may be more difficult today, but that's no excuse for not looking ahead. Even with today's low interest rates and turbulent stock market, careful planning is still the surest route to a comfortable retirement.

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