a long wait, Godot may actually be turning up.
bankers left a key interest rate unchanged in May, but
three rate hikes in 2017 and up to four projected for
2018 by year-end finally seem to be translating into
savings account and certificate of deposit rates that
are becoming at least somewhat attractive to risk-averse
top online high-yield savings accounts were paying 1.75
percent recently, while Synchrony Bank was offering a
2.35 percent yield on a 14-month CD, according to
Fedís most recent non-action was accompanied by
language in its report that indicates a rate hike is
likely in June, with more after that, said Greg McBride,
Bankrateís chief financial analyst.
clear that hikes are going to continue," he said.
"And that bodes well for savers and
banks are scrambling to leapfrog competitors, so it pays
to shop around for the highest rates, he said. It also
pays to stay short term: The 2.35 percent yield on
Synchronyís 14-month CD is just a half of a point
lower than the best 5-year CD.
just not enough additional yield to warrant going into
longer maturities," McBride said. "Take the
flexibility to reinvest rather than locking into
believes retirees are nearing an important inflection
point, where rates on so-called risk-free investments
such as FDIC-insured CDs rise enough to provide a
positive, inflation-adjusted return.
big question is whether it will be too little, too late,
or if retirees will indeed flock back to safe
investments as a haven from stock market volatility.
in the aforementioned Samuel Beckett play, "Waiting
for Godot," a lot has happened while retirees have
been waiting for better returns on guaranteed bank
years, financial advisers have been coaxing retirees to
own more stocks as an inflation hedge, and they
listened. A Gallup study released last year showed
people 65 and older were the only age group to show an
increase in stock ownership during the period 2009 to
2017, compared with the years prior to the years leading
up to the 2008 U.S. financial crisis.
they may be reluctant to jump into annuities, even
though higher interest rates generally translate to
higher payouts. Thatís because annuity rates have been
hurt even more severely in recent years by new life
expectancy tables that account for increases in
longevity. A tiny uptick in rates wonít reverse the
effects of the life expectancy changes.
rates would have to move significantly to move the
needle" much on annuity rates, said Stan Haithcock,
an annuity agent and author of books on the topic.
"But eventually it does move the needle, itís
just not quick enough that it pays to try to wait"
for increases, he said.
the flipside of the interest coin, keep in mind that
borrowing rates are increasing even faster, so retirees
still holding debt should consider stepping up those
payoff plans, experts said.
cards are a direct pass-through pegged to the prime
rate, so when it goes up, cardholders see it right
away," McBride said.
if they can minimize debt exposure and reign in their
own personal cost of living, retirees stand their first
chance in more than a decade to earn a risk-free,
after-inflation positive return, he said.
to see you, Godot.