Plan Ahead for Retirement with a High-Yield IRA CD or Savings Account

Find out about the savings account benefits of IRAs (individual retirement accounts) from Citizens Bank and choose the right option for you

It’s easy to relax about your retirement savings plan once you’ve opened your 401(k), but to continue growing and planning for the future, it’s important to also contribute to high-yield savings accounts such as IRAs. The sooner you start saving, the more comfortably you’ll live in retirement. Whether you’re starting from scratch or building on the savings you already have, Citizens Bank has options that can help you meet your retirement savings goals. Use this guide to navigate the different considerations and benefits of IRAs to choose the right IRA savings tool for you.

Open an IRA Savings Plan with standard savings account interest rates to get started building your retirement savings

The IRA Savings Plan from Citizens Bank is a flexible way to build up the funds you need without sacrificing access to your money. With no minimum balance to open and no bank early withdrawal penalties, the IRA Savings Plan offers savings account benefits ideal for a young professional just starting to think about retirement. The account provides you with a competitive interest rate and when linked to the Steady Save® automatic savings program, you can readily begin to save without even thinking about it.

Additionally, unlike standard savings accounts, IRA savings accounts have the option of being set up as tax-deferred accounts until you withdraw the funds in retirement. Once you have built up your retirement savings with this account, you may want to roll the IRA funds into a higher-yield savings account, such as an IRA certificate of deposit (CD), which would have better interest rates.

Savings account vs. CD, Grow your retirement funds with an IRA CD

As your income and savings grow, it may benefit your finances to look into different types of IRA savings options. IRA CDs are high-yield savings accounts that have competitive, fixed interest rates that may offer greater return on your retirement funds. While you cannot withdraw your money before your CD term is up, you will have the option of rolling the funds over into a new CD or other IRA savings account once the CD has reached maturity.

An IRA CD has a higher minimum deposit to open, and this initial deposit is the only one you can make during the term of the CD. For this reason, consider opening your IRA CD with a larger minimum balance, such as $1,000 to $2,000. However, you will face a withdrawal penalty if you remove funds before the end of the term, so make sure you have enough savings and disposable income available before opening an IRA CD.

Compare IRA savings options

Saving money with an IRA offers a number of benefits, but it’s important to choose the right retirement savings plan based on your current needs and future retirement savings goals. Our chart below can help you decipher which IRA savings option may benefit you the most.

 

Current Situation IRA Savings Plan IRA CD
I want to start saving for retirement, but may need to access my money before then. X  
I have a large amount of money to set aside and am comfortable with it being inaccessible for a period of time.   X
I would prefer to contribute smaller amounts over time, rather than a large lump sum up front. X  
I want my money to earn interest more quickly.   X
I’ve started saving, but I want to grow my retirement nest egg even more. X X

Choosing to set up your IRA savings as Traditional or Roth IRAs

Whether you open an IRA CD or the IRA Savings Plan, you’ll have the choice of setting up your account as a Traditional or Roth IRA . Both Traditional and Roth IRAs have unique savings account benefits, and you should speak to a representative before making the decision of which one is right for you. Traditional IRA contributions are tax-deferred and typically tax-deductible in the year in which they are made, but you are required to make withdrawals starting when you pass age 70.

Roth IRAs, on the other hand, do not offer tax-deductible contributions. However, they can be beneficial if you will be in the same or a higher tax bracket when you reach retirement, since your earnings and distributions are tax free and there is no required distribution age. Both types of IRAs are capped at an annual contribution limit that may change each year.

Start saving for retirement with an IRA from Citizens Bank

At Citizens Bank, our IRA savings options are designed to help you prepare for retirement, from starter savings account plans with lower interest rates to high-yield savings accounts in the form of IRA CDs. Stop by your local branch or give us a call for more information about opening an IRA .