Forget CDs for Your Retirement. Here’s a Much Better Way to Grow Your Nest Egg

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CD rates are falling after holding steady at 5% or more for a good stretch of time. But even so, CDs are still paying pretty generously. Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. You may not be able to get 5% on your money anymore. But you can easily find a CD in the 4% range, with some paying 4.5% or more. CDs are a great tool to use when you’re saving for a short-term goal — one that’s a few years away or closer. But if you’re trying to save for retirement, then sticking with CDs is a move that might backfire on you.The problem with CDsCDs happen to be paying pretty well right now. But today’s rates are certainly not the norm. They’re also not expected to stick around much longer.The Federal Reserve has already begun lowering its benchmark interest rate. And as the Fed continues to make rate cuts, CD rates are expected to fall. This isn’t to say that by this time next year, the best you’ll be able to get is a 1.5% CD. But will most CDs be paying 2.5%? That’s certainly possible.Now, let’s think about what that might mean for your long-term goals, like retirement. Imagine you’re able to save $500 a month toward your senior years. You could set up a CD ladder and add that sum to it every month. If your CD ladder pays you 2.5% per year, which is a reasonable expectation over the long run, then after 30 years, you’ll be sitting on roughly $263,000.That’s certainly a nice amount of money to bring into retirement. But you should know that with a stock portfolio, you can do worlds better.Why stocks are a better solution for building retirement wealthThere’s no question that stocks are a riskier asset to put your money into than CDs. But you should also know that when you invest over a long period, you lower your risk by giving yourself time to ride out market downturns.Over the past 50 years, the S&P 500’s average yearly return has been 10%. That accounts for years when the market did great and years when it did horribly.Now, let’s go back to the example above. Let’s say that instead of putting $500 a month into CDs, you put it into an IRA and invest in an S&P 500 index fund. If you’re able to generate a 10% yearly return on your money, in 30 years, you’ll be looking at about $987,000.Put another way, with stocks, you might end up with four times as large a nest egg as you’d get with CDs. It pays to open an IRA from one of these brokers today and start investing. Of course, you don’t have to use an IRA to save for retirement. But IRAs offer the benefit of tax-free contributions and investment gains. They also, however, force you to wait until age 59 1/2 to take withdrawals without a penalty. If you want more flexibility, open a brokerage account today and use it to grow your nest egg. There’s nothing wrong with using CDs on a short-term basis. But relying on them for your retirement nest egg could leave you short on money for your senior years. And you deserve better.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.”}]] [[{“value”:”

CD rates are falling after holding steady at 5% or more for a good stretch of time. But even so, CDs are still paying pretty generously.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

You may not be able to get 5% on your money anymore. But you can easily find a CD in the 4% range, with some paying 4.5% or more.

CDs are a great tool to use when you’re saving for a short-term goal — one that’s a few years away or closer. But if you’re trying to save for retirement, then sticking with CDs is a move that might backfire on you.

The problem with CDs

CDs happen to be paying pretty well right now. But today’s rates are certainly not the norm. They’re also not expected to stick around much longer.

The Federal Reserve has already begun lowering its benchmark interest rate. And as the Fed continues to make rate cuts, CD rates are expected to fall.

This isn’t to say that by this time next year, the best you’ll be able to get is a 1.5% CD. But will most CDs be paying 2.5%? That’s certainly possible.

Now, let’s think about what that might mean for your long-term goals, like retirement. Imagine you’re able to save $500 a month toward your senior years. You could set up a CD ladder and add that sum to it every month. If your CD ladder pays you 2.5% per year, which is a reasonable expectation over the long run, then after 30 years, you’ll be sitting on roughly $263,000.

That’s certainly a nice amount of money to bring into retirement. But you should know that with a stock portfolio, you can do worlds better.

Why stocks are a better solution for building retirement wealth

There’s no question that stocks are a riskier asset to put your money into than CDs. But you should also know that when you invest over a long period, you lower your risk by giving yourself time to ride out market downturns.

Over the past 50 years, the S&P 500’s average yearly return has been 10%. That accounts for years when the market did great and years when it did horribly.

Now, let’s go back to the example above. Let’s say that instead of putting $500 a month into CDs, you put it into an IRA and invest in an S&P 500 index fund. If you’re able to generate a 10% yearly return on your money, in 30 years, you’ll be looking at about $987,000.

Put another way, with stocks, you might end up with four times as large a nest egg as you’d get with CDs. It pays to open an IRA from one of these brokers today and start investing.

Of course, you don’t have to use an IRA to save for retirement. But IRAs offer the benefit of tax-free contributions and investment gains. They also, however, force you to wait until age 59 1/2 to take withdrawals without a penalty. If you want more flexibility, open a brokerage account today and use it to grow your nest egg.

There’s nothing wrong with using CDs on a short-term basis. But relying on them for your retirement nest egg could leave you short on money for your senior years. And you deserve better.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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