Are CD’s a Good Retirement Investment Choice?

Are CD’s (Certificates of Deposit) a good investment option when planning for retirement?

Q: I am nearing retirement and trying to find out what I should do with my Thrift Savings. I know I want to take it out, but I am not sure what to do with it. My banker is trying to sell me some of his bank CD’s (Certificate of Deposit). Aren’t there better options?

A: “Better” is a tricky word. Certainly, there are several non-bank sponsored investment choices that may offer the potential for greater returns.

CD’s have been trusted by retirees for decades. However, there may be a built-in downside to over-reliance on CD returns for retirement investing. Retired (or retiring) Feds on fixed incomes at the very least want to maintain their lifestyles during retirement, although by over utilizing CD’s, they may be doing just the opposite.


According to, in January 2016 an average 1-year CD was paying .27%. Yet according to US inflation calculator, inflation for 2016 was 2.1%. That means on a $100,000 (1-year) CD investment, the investor would receive $270 in gains for that year, yet they would have lost $2,100 in buying power therefore experiencing a total net loss of $1,830 in buying power.

Unfortunately, this scenario is not unique. CD’s often have a hard time keeping up with, let alone outpacing, inflation. A sometimes misunderstood or ignored point to understand is that inflation causes prices to rise making the buying power of our money diminish over time.

In my opinion, a CD’s job is to try to protect principle, provide liquidity and (in some cases) balance the sting of a declining market. It is not well-equipped to grow a retirement account.

As a PART of a comprehensive plan, I have no problem with CD’s. The real question is, how much is appropriate? Consider what you want from the money you would place in CD’s: is it safety, liquidity, downside protection, or is it growth?

Answer that question, and you may be able to determine if CD’s are (in any amount) a good choice for you. However, if you don’t feel you have the knowledge or understanding to determine the right answer for you, I suggest finding a qualified advisor, someone that deals with this question (along with other common federal retirement questions) every day.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.  Investing involves risks, including the loss of principal.  No strategy assures success or protects against loss. Silverlight Financial, Infinity Financial Services and its affiliates do not provide tax, legal or accounting advice. This material is not intended to provide, and should not be relied on for tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. For a list of states in which I am registered to do business, please visit

About the Author

Randy Silvey is the published author of You FIRST, Federal Employees Retirement Guide, one of the bestselling books of its kind on Amazon and Kindle. For over 18 years, he’s been educating and guiding Feds in pursuing wealthier retirement lifestyles. Randy can be reached at 816-524-1515 or visit his website at Securities offered through Infinity Financial Services. Member FINRA/SIPC.