Certificates of Deposit (CDs) are a type of savings account that holds a fixed amount of money for a fixed period of time, and in return, the bank pays a specific interest rate. Federally insured institutions often offer varied interest rates on these accounts, potentially providing preferential terms to individuals aged 65 and older. This can manifest as higher annual percentage yields (APY) compared to standard CD offerings.
These financial products can provide a comparatively secure investment option, particularly valuable in retirement planning. The fixed interest rate guarantees a predictable return, mitigating the risk of market fluctuations. Historically, CDs have served as a stable component of diversified investment portfolios, allowing individuals nearing or in retirement to preserve capital while earning a modest income stream.
