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Strategies to Save

How Retirement Planning Can Help You Save for the Future

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Retirement planning
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Retirement planning, like any other long-term goal, requires some forethought and intention. Slow and steady wins the race when it comes to padding your nest egg, but many Americans are struggling to adequately prepare for their golden years.

Almost 50% of families in the U.S. have nothing at all set aside for retirement, according to research from the Economic Policy Institute. It’s little wonder that three in 10 workers say the topic stresses them out.

The truth is that it’s never too late to up your savings game. Whether you’re right on track or way behind schedule, retirement planning can make saving for the future a little easier. Here’s what you need to know.

What is a retirement plan?

A retirement plan is exactly what it sounds like — a strategy for shoring up your financial security when you’re no longer in the workforce. This begins with figuring out how much money you’ll actually need in retirement. (We’ll dive into this shortly.) From there, it’s about earmarking a reasonable amount of monthly income for your future self.

It would be wonderful if our income divided itself evenly between all our financial goals, but that’s rarely the case. Throughout your life, it’s normal to alternate between hitting your retirement savings goals and pulling back in order to fund other financial priorities, like paying down debt or building your emergency fund. Effective retirement planning usually requires some trade-offs, a little bit of effort and the ability to tweak and course-correct along the way as life happens. In other words, retirement planning is dynamic.

“The plan that gets you to retirement is more than likely not going to be the plan that gets you through retirement,” Jim Brogan, a Knoxville-based certified retirement financial adviser, told MagnifyMoney. “Until you retire, you’re in a saving phase of life; after you retire, you’re in a spending phase.”

Retirement plans take many forms. If you don’t know your 401(k)s from your IRAs, rest easy. Let’s unpack the details.

Types of retirement plans

401(k)s

This employer-sponsored retirement account automatically takes a percentage of each paycheck and earmarks it for retirement. The beauty of a traditional 401(k) is that your contributions are tax-deductible, which is a nice perk come tax time. The lower your taxable income is, the lower your tax liability will be. On top of that, because your retirement savings aren’t taxed when you contribute them, that means your money can grow tax-free. When it comes time to pull that money out for retirement, it’ll then be taxed as ordinary income.

401(k)s come with a number of perks, the biggest being if your employer offers any sort of match — that’s free money. Every company is different, so you’ll want to contact your HR rep to clarify the details. Some employers, for example, will match 100% of your contributions up to 3% of your salary. Others might match half of your contributions up to 3% to 5% of your earnings. That means you’ll cash in on your employer making regular deposits into your account, which is the most effective way to leverage all that 401(k)s have to offer.

Just keep in mind that the IRS does put a cap on how much you, as an individual, can kick into your 401(k). For 2018, you can contribute up to $18,500, unless you’re 50 or over, in which case you can contribute up to $24,500.

Side note: 403(b)s are similar to a 401(k). They’re essentially the same, except that instead of being sponsored by private companies, they’re available to certain employees at public schools, nonprofits and churches.

Individual Retirement Account (IRA)

This kind of retirement account has nothing to do with your employer. You open it independently and can load it up with a maximum of $5,500 every year. (If you’re 50 or over, that number jumps to $6,500.) There are two main types of IRAs: traditional and Roth.

You can open an IRA at many major banks, investment firms or any of the new robo-advisory services that have cropped up over the years.

Traditional IRA

Roth IRA

Like 401(k) contributions, what you put in counts as a tax deduction. Your money also grows tax-free, but it is taxed as ordinary income when you make withdrawals during retirement.

Just keep in mind that if you tap into it prior to age 59½, you'll typically have to pay taxes on it, plus a 10% penalty.

The Roth IRA works a little differently. You won't enjoy that tax break when putting money in, but your cash does grow tax-free and you won't get hit with taxes when you withdraw during retirement.

In fact, you can pull from it whenever you want, even prior to retirement, without any penalties. The only time you'll be penalized is if you tap into the appreciation (i.e. your investment returns) before age 59½.

One other thing worth mentioning is that Roth IRAs also come with income limits. If you’re single, your annual earnings have to be under $135,000; it’s under $199,000 for married folks filing their taxes jointly.

Pensions

If your employer offers a pension, they’ll kick money into your plan during the years you’re still working. Then when you retire, that money comes your way either in a lump sum or as a monthly payment — think of it as a retirement paycheck of sorts that’ll likely be considered regular taxable income.

How much you’ll get depends on a number of factors, like your salary and how long you worked for the company. A pension provides peace of mind because the money is guaranteed to be waiting for you in retirement, which makes retirement planning a little easier.

Health Savings Accounts (HSAs)

Don’t let the name fool you. Health savings accounts (HSAs) can double as retirement-saving vehicles that go beyond medical expenses and are offered by certain employers.

If offered by your employer, you can make contributions before taxes are taken out, typically via automatic withdrawals from your paychecks. (If you open an HSA yourself, any contributions you make can be claimed as a tax deduction, which lowers your taxable income.)

You can tap into this fund tax-free to cover qualified medical costs at any time, but the reason it’s great for retirement is that once you hit 65, that money is yours for whatever you like — free and clear, tax-free, whether it’s for medical expenses or not.

HSA rules: The main catch is that you have to be enrolled in a high-deductible health plan to qualify. This translates to a deductible that’s at least $1,350 for individuals; $2,700 for families. Contribution limits apply. For 2018, they cap out at $3,450 for single individuals; $6,850 for families. There’s also a catch-up contribution for 55+ folks, which allows you to kick in an extra $1,000. Check to see if your employer offers an HSA; if they don’t, anyone can open one if they meet the eligibility requirements.

Taxable investment accounts

Tax-advantaged accounts, like 401(k)s and Roth IRAs, are by far the best way to maximize your retirement planning efforts over the long haul. If you have some extra income leftover, directing it toward a taxable investment account is another way to build up your nest egg.

Brokerage firms offer these accounts as an additional way to save for retirement. Sure, they don’t come with tax benefits, but they also offer more freedom since you aren’t handcuffed to contribution limits, salary restrictions or early withdrawal penalties.

That said, you’ll have to ask yourself if it makes better financial sense to max out your 401(k) and/or IRA before looking to an investment account. Either way, you’ll definitely want to at least contribute enough to recoup any 401(k) employer match. Every case is different, but don’t be so quick to dismiss investment accounts because of the tax factor.

How to plan for retirement at every age

No matter what stage of life you’re in, you can always be working toward your retirement goals. Here’s what our experts have to say.

Retirement planning in your 20s:

“Your 20s is the best time to get into the habit of paying yourself first by automatically saving a portion of every paycheck,” Mark Wilson, an Irvine, Calif.-based certified financial planner, tells MagnifyMoney.

Time is on your side. Thanks to the magic of compounding interest, your early saving years are most powerful. Because you have more time to recover from any market setbacks, most experts recommend investing aggressively in stocks vs. safer, low-yield investments like bonds. A simple way to do that without getting too in the weeds is to sign up for a target-date fund.

Let’s say you open a Roth IRA and add just $50 a month starting at age 25. Assuming an average of 7% annual returns, you’ll have accumulated over $128,000 by the time you turn 65.

But how do you manage retirement savings if you have debt or can barely cobble together an emergency fund?

“For most 20-somethings, the number one goal isn’t saving for retirement,” Douglas Boneparth, a New York City-based certified financial planner, told MagnifyMoney. “Your 20s is really the time where you need to focus on equipping yourself with a strong foundation in personal finance.”

You may need excess income to help fund your financial goals, whether that be building a three- to six-month emergency fund, paying down high-interest debt or whatever matters most to you. That said, if your employer will match your 401(k) contributions in some way, passing on it means leaving free money on the table.

“Taking that match is a no-brainer; you could immediately get maybe a 25% or even 100% return on those first dollars,” said Wilson.

This certainly isn’t to say you shouldn’t get a jump on retirement planning — it just means that getting yourself on solid financial ground should be top of mind. Begin by getting a firm grasp on your income and expenses, then creating a realistic budget that feels doable for your lifestyle. After all your monthly bills are paid, how much is left over? This is what Boneparth refers to as “mastering your cash flow.”

How much should you save? He says earmarking 10% to 15% of your income for retirement is the ideal scenario, but if this isn’t feasible, the idea is to squirrel away at least enough to get an employer match. The most important thing is getting into the routine of saving. You can always dial up your efforts as you start earning more.

The main takeaways for your 20s:

  • Establish a strong financial foundation — track your income and expenses, and create a realistic budget.
  • Identify your financial goals, then use excess monthly income to fund them little by little.
  • If your employer offers a 401(k) match, try to contribute enough to lock down this free money.
  • Get into the habit of setting aside some portion of every paycheck for retirement. A little can go a long way when it comes to compounding interest.

Retirement planning in your 30s:

By this point, most people are earning more than they did the decade before, of course many also have new expenses — a mortgage, kids, child care bills etc.

Having competing money goals never really goes away, but padding your retirement fund should be a priority at this point. Brogan says that if you’re just starting to save for retirement now, you should aim to sock away 10% to 15% of each paycheck.

“This can feel overwhelming for someone who’s already established in their work life and used to spending that money, so I suggest starting small,” he said.

For example, begin by saving just 2% of your income, then increase it gradually every year. You can also direct, say, 50% of every work bonus or a percentage of every tax refund or raise to your retirement accounts. Using cash windfalls feels less painful since they’re separate from your monthly budget.

Also, if you don’t have life insurance, it’s time to seriously consider it. This is doubly important if you are a primary breadwinner or you have children who depend on you. Check out our guide to life insurance here.

The main takeaways for your 30s:

  • Shoot to set aside 10% of your income for retirement. If this feels overwhelming, start small and gradually work your way up.
  • If you’re short of your goal, boost your efforts by leveraging cash windfalls like work bonuses, raises and tax refunds.

Retirement planning in your 40s:

Our financial priorities are always evolving, but many people in this phase of life feel particularly torn between two biggies: college savings versus retirement. Parental instincts often nudge us to take care of our children before ourselves, but our experts actually say that your retirement should come before financing your kids’ education.

“Unlike college, there are no scholarships or loans you can get for retirement,” warned Wilson. “If you’re behind on retirement savings, this is the time to kick it up because by the time you get into your 50s, it’s only going to get harder.”

On that note, Wilson says those just getting started should strive to save no less than 15% of their income for retirement at this point. This obviously may require some budgeting overhauls. Tracking your expenses may help you reveal areas of wasteful spending. Can you negotiate down any bills or go without cable, for example? Can you pick up a side gig or consolidate high-interest debt to free up more money for retirement? Every little bit helps.

The main takeaways for your 40s:

  • If you haven’t started saving at this point, strive to earmark 15% of your income for retirement. This may require reworking your budget. Remember: Something’s always better than nothing, even if it’s short of that 15% mark.
  • Retirement savings on track? If possible, up your account contributions.

Retirement planning in your 50s

Now you’re really on the home stretch. Once you get five to 12 years out from retirement, Brogan suggests really sitting down and asking yourself what your income needs will be like once the time comes. This is important as fewer than 50% of Americans have actually calculated their retirement number, according to the U.S. Department of Labor.

Begin by clarifying how much guaranteed income will be provided. Social Security benefits and pensions, for example, fall into this category. To ballpark your Social Security benefits, check out this handy guide. According to the Department of Labor, these benefits, on average, are equal to roughly 40% of your pre-retirement earnings.

If, for instance, you’ll be getting $40,000 in Social Security between you and your spouse, and you’ve decided you need about $65,000 a year to live comfortably, that means you’re going to have to draw $25,000 from savings each year to maintain that lifestyle. (Just be sure to adjust for inflation.)

Those who aren’t quite hitting their savings goals can contribute more to 401(k)s and IRAs once they turn 50, at which point the IRS allows for higher contribution limits. The same goes for Health Savings Accounts once you turn 55.

The main takeaways for your 50s:

  • Think about what your income needs will actually be like in retirement. Then pinpoint any guaranteed income like Social Security benefits, pensions and so on. How much will you actually need to draw from your retirement accounts each year?
  • Continue kicking into your retirement accounts.
  • If you’re behind, consider leveraging catch-up contributions.

Retirement planning in your 60s

The average retirement age in the U.S. is 63, according to the Statistic Brain Research Institute. The good news is that those who are behind still have some time to shore up their finances before leaving the workforce. One of the best strategies is having a practical retirement date.

“Working an extra two years is the easiest way to make a big impact on your nest egg,” said Wilson.

Another workaround is to delay when you start taking your Social Security benefits. According to the Social Security Administration, you can begin cashing in on them at age 62, but how much you get increases every year that you get closer to what’s considered full retirement age (67). Here’s how the SSA breaks it down:

Age you start collecting Social Security

How much of your monthly benefit you'll get

62

70%

63

75%

64

80%

65

86.7%

66

93.3%

67

100%

One other tidbit: About five years before you retire, Brogan recommends beginning to set aside whatever money you’ll need during your early years of retirement — say, the first five years or so — into stable investments. If you find yourself in the middle of a market downturn right after you step away from your job, having some money in a traditional savings account, for instance, means you won’t have to liquidate money in the market while it’s down.

The main takeaways for your 60s:

  • Be reasonable about your retirement date. Staying in the workforce could majorly boost your nest egg.
  • Consider delaying your Social Security benefits, if necessary.
  • About five years before you retire, start setting a few years’ of retirement income into an account that’s separate from the stock market.

Final thoughts on retirement planning

Retirement planning is far from a one-size-fits-all approach, but some general rules of thumb do apply. Read up on which type of retirement account feel right to you. Then set yourself up for long-term success (and reap the benefits of compound interest), by beginning to save as early as possible. If your employer offers free money by way of a 401(k) match, all the better.

Once you get into your 60s, you can ratchet up your savings even more by settling on a reasonable retirement date and delaying your Social Security benefits, if possible. Of course, you’ll have to tweak and adjust along the way as life happens, but accommodating other financial goals doesn’t have to be an either/or situation.

The most important thing is to nurture the habit of routinely earmarking some portion of your earnings for your nest egg — in good times and bad.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Marianne Hayes
Marianne Hayes |

Marianne Hayes is a writer at MagnifyMoney. You can email Marianne here

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Strategies to Save

Best Money Savings Apps

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

best mobile apps
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Saving money isn’t always as simple as the oft-prescribed “put it away and don’t touch it” advice makes it seem. With financial concerns constantly tugging at our attention, it can be difficult to find the time and money to save for future goals, events or the unavoidable emergency.

If the savings aren’t there when you need them, you may finance a purchase or cover an emergency with debt like a credit card or personal loan. In a pinch, those tools can be invaluable. But taking on debt should generally be considered a last resort, as carrying debt comes with its own risks.

Luckily for the tech-savvy, the fintech revolution gave rise to several mobile apps designed to help you save money — and make saving a bit more interesting, to boot. Read on to discover the best money savings apps to help you save for short term goals like a vacation, long term goals like a home or college education, and pad your all-too-important emergency fund.

Best money savings apps to help you save daily

Consistency is the root of wealth-building. That said, it follows that saving a little bit of money every single day can be a good practice to start building a wealth mentality. It also happens to be a great way to save money without feeling drastically penalized today to serve your future goals, since you can split your saving into small chunk sand meet targeted saving goals. The following money savings apps can help you get into the habit of saving a little bit of money every day.

Best for saving money on a tight budget: Joy

App Store: 4.3/5, Google Play: n/a
If you’re on a tight budget, the Joy app may be a great way to find money you didn’t think you had.

This free iOS app analyzes your income and spending habits and calculates how much money you can safely save each day without breaking your budget. The Joy app won’t automatically make the transfer for you, so you’ll have to open up the app and decide whether or not to save the money. If you say yes, the funds will be transferred from your linked account to an FDIC-insured Joy savings account.

You can also elect to save more or less than the amount suggested, as you can move money into your Joy savings account anytime. If you need a reminder, set up a daily notification to remind you to make the transfer.

When you’re ready to spend your savings, you can transfer the funds from the Joy savings account to an external account.

Another popular app, Digit, deserves honorable mention. Digit calculates how much you can save each day and will make the transfer for you, automatically — however, Digit costs $2.99, so it may not be a viable option for those on a tight budget.

Best for saving up an emergency fund: Chime Banking

App Store: 4.7/5, Google Play: 4.4/5
Standard financial advice suggests keeping three to six months worth of monthly expenses stashed away in an emergency fund, just in case you run into a financial emergency. In reality, however, around 40% of Americans report they aren’t able to cover a $400 emergency out-of-pocket, while the average U.S. monthly household expenditure is about $5,005.

Chime, a mobile-only bank, hopes its app’s automatic savings features may just help you beat the status quo and make it a little less painful to finally build up your emergency fund. The Chime app is free and available for both iOS and Android devices.

When you enroll in direct deposit and Save When You Get Paid, Chime will automatically transfer 10% of each paycheck into a seperate Chime savings account for you. If you’re enrolled in Chime’s automatic savings program, the bank will also automatically round up each transaction made with your Chime Visa debit card and deposit the amount into your savings account, too.

Best for saving money for a vacation: Tip Yourself

App Store: 4.6/5, Google Play: 4.4/5
Tip Yourself is a free app that may help you save for your dream trip. With the Tip Yourself app, available on iOS and Android devices, you can reward yourself for positive behavior by transferring a little bit of money to your digital tip jar each time you accomplish a personal goal.

If you make it to the gym on a Tuesday, for example, tip yourself $1 (or whatever amount you feel you deserve). The same goes for every other personal goal you may have, such as getting to work earlier or calling your parents once a week.

The app aims to help its users build savings habits and motivate them to stay more consistent about their personal goals, too. The app also has a social feed, so you can share your wins — big and small — with your peers in a supportive community. If you’re into maintaining a streak, there is also a calendar that keeps track of the days you did tip yourself.

With Tip Yourself, you can set a savings goal for your next vacation. When you reach your goal, you’ll feel confident taking a vacation knowing the money you’re spending is your reward for keeping the promises you made to yourself.

Best money savings apps to help you save monthly

Saving money on a monthly basis for large goals doesn’t have to come down to what’s left over at the end of the month. And it won’t, if any of the following money savings apps have anything to do with it. The apps below encourage users to set aside the funds when they have them, before the money is absorbed into their monthly expenses.

Best for saving money for a car: Qapital

App Store: 4.8/5, Google Play: 4.5/5
A car is a fairly large savings goal to meet, but it can seem less daunting if you can save a bit toward your vehicle each time you are reminded why you need the car in the first place — that’s where Qapital comes in.

With Qapital, you can set customizable autosave rules for just about anything, so you can save money simply with the actions you take living your life. You can set a custom rule; for example, you can save a certain amount of money each time you pay for a public transit ticket or fill up the tank for that friend who drives you to work.

Qapital has a bunch of other ways to help you save up for a car, too. With the round up rule, the app will round up all of your transactions and automatically transfer the difference to your designated goal account. So each time you pay for anything, you will have a little bit of money going toward your car. The spend less rule saves whenever you spend less than a certain amount with a retailer or in a certain spending category, and the guilty pleasure rule saves a certain amount whenever you spend on a chosen guilty pleasure, like ordering takeout.

When your goal is funded, you can withdraw the funds and spend it on your chosen vehicle. The free Qapital app is available for both iOS and Android devices.

Best for saving money for a child’s future: Kidfund

App Store: 4.8/5, Google Play: n/a
Whatever your child’s future holds, having the money on hand to help them accomplish their goals will come in handy. With Kidfund, not only can you contribute to your child’s future success, but so can your family, friends and anyone who supports your child’s dreams.

You can open a dedicated savings account for each of your children and set a rule to gift money to your child’s account on a periodic basis. For example, you can gift each of your children’s Kidfund accounts $20 each month. Kidfund awards interest based on the balance within the account.

On top of your giving, you can invite your friends and family members to follow your child’s Kidfund account and they can gift money to the account for birthdays, holidays or whatever reason. When the time comes, you’ll have the money waiting in the Kidfund account to fund your child’s dreams.

Kidfund is a free social savings app available only on iOS devices.

Best for saving money for the holidays: Simple

App Store: 3.8/5, Google Play: 4.2/5
Simple is a mobile-first bank that helps you set aside money for future goals. With a fee-free Simple account, you can set and fund financial goals with a target date. Simple will then calculate how much money you need to transfer periodically to reach your goal by your specified target date, based on the frequency you set.

For example, you can set a goal to save $500 for holiday shopping over 10 months and set the frequency to transfer an amount each month. Simple will automatically set aside $50 each month so you’ll reach your goal for the holidays.

The money for the goal will remain in your Simple account, but will be set aside and tagged for that specific purpose. The amount designated toward the goal will be deducted from your total to give show you how much money is safe for you to spend. The Simple app is free and available on iOS and Android devices.

Best money savings apps to help you save in the long term

Saving for long-term goals can be difficult when you can’t see the tangible results of your efforts just yet. Using one of the money savings apps below may help you keep track of the progress made toward your savings goal, so you can stay motivated as you wait, save and watch the investment you are making towards your future grow with time.

Best for saving money for a house: Rize

App Store: 4.2/5, Google Play: 3.7/5
Rize is a free automatic savings app available for both iOS and Android devices. It helps you earn extra money on your savings for a long-term goal (like a home down payment) and offers a high APY on your cash savings. You also have the option to earn even more on your savings by investing the funds. You set a goal amount and how often you want Rize to pull a specified amount of money from your account, and the app will do the rest of the work for you.

You can set investment or cash savings goals. The money saved in a Rize account earns interest on cash savings. If you choose to invest your money, it’s put into exchange-traded funds which earn varying interest rates.

Rize doesn’t charge any fees on your cash savings or require a minimum amount to open an account; instead, it lets you decide how much you want to pay. If you invest your money, Rize asks you contribute a minimum $2 per month to your account and pay an annual 0.25% management fee of your invested assets.

Rize also has a few built-in features to help you reach your goal a bit faster. It calls the features “Power Ups,” and you can turn them on or off at any time. You can use the Accelerate feature to automatically increase your contribution by 1% each month. So if you are saving $100 toward your down payment this month, Rize will increase your contribution to $101 the next month.

Rize also has a Boost feature that calculates how much extra money you have based on your income and spending habits, and automatically transfers up to $5 to your goal whenever “it makes sense,” which Rize says is about once or twice a week.

Best for saving money for college: Clarity Money

App Store: 4.7/5, Google Play: 4.1/5
Clarity Money is a free automatic budgeting and savings app available for both iOS and Android devices. The app helps you save by setting rules for how often and how much you want Clarity to automatically stash away for goals, like paying for next semester’s tuition or funding your child’s college savings account.

Clarity Money also has a few other features that may help you find more money in your budget to save for school fees. The app can analyze your expenses to find where you may be able to cut back on subscription services and free up some of your funds. Its budgeting features display your spending habits and let you know when you are going over your intended budget in a category, so you can adjust your spending behavior before you overspend. Clarity Money does not charge any fees for its services.

Best for saving money for retirement: Acorns

App Store: 4.7/5, Google Play: 4.3/5
Acorns is an investing app popular for letting its users invest the spare change from their daily transactions with its Acorns Core option. With Acorns Core, the app automatically rounds up your transactions to the nearest dollar and invests the difference into your chosen investment portfolios (once you’ve reached a minimum $5 in roundup savings).

Acorns also has a retirement savings feature called Acorns Later. With Acorns Later, you can invest your money in an Independent Retirement Account (IRA) and set recurring contributions from your linked account. You can invest using a Roth IRA, Traditional IRA or SEP IRA. The ETFs in your investment portfolio will automatically adjust to fit your needs over time based on your retirement date and goals. You can’t have Acorns Later without have Acorns Core, and having both costs the user $2 per month. Acorns Core only is $1 per month.

The Acorns app is free and available for both Android and iOS devices, but the Acorns service costs $1, $2, or $3 (with the Acorns Spend checking account) per month depending on what plan you select.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Brittney Laryea
Brittney Laryea |

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at [email protected]

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Earning Interest, Reviews, Strategies to Save

Review of Live Oak Bank’s Deposit Rates

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Live Oak Bank’s savings account

When it comes to the best savings accounts with high interest rates, Live Oak Bank currently has one of the highest rates.

APY

Minimum Deposit

2.15%

Up to $5 million

(but only up to $250,000 is FDIC-insured)

  • Minimum opening deposit: $0
  • Monthly account maintenance fee: $0
  • ATM fees: None
  • ATM fee refunds: None

Live Oak Bank currently has one of the best savings account rates available. This means that Live Oak Bank is lowering the bar and allowing anyone to take advantage of these high interest rates, no matter how much is in his or her pocket right now.

Live Oak Bank wants you to use your savings account, and use it often, which is one reason why it has no monthly maintenance fee. If there is no activity on your account for 24 months and your balance is less than $10.01, Live Oak Bank will take the remainder of your balance as a Dormant Account Fee and close your account.

Getting money into a Live Oak Bank savings account from an external bank account can take a little bit of time depending on how you do it. If you request the money through Live Oak Bank’s online portal, the funds won’t be available for up to five or six business days. But if you opt instead to send the money to Live Oak Bank from your current bank, the money will be available as soon as it’s received. Your Live Oak Bank savings account will start earning interest as soon as the money posts to your account.

You can easily withdraw your money at any time via ACH transfer. Simply log into your Live Oak Bank savings account and electronically transfer it to whichever bank account you wish. It’ll be available in two to three business days.

You are limited to making just six withdrawals per month with this savings account. That’s not a Live Oak Bank thing; that’s a federal regulation imposed upon savings accounts in the U.S. If you absolutely can’t wait until next month to make another withdrawal past your allotted six per month, you’ll be charged a $10 transaction fee for each additional action.

Live Oak Bank CD rates

Live Oak Bank also has some of the best CD rates with a decent deposit amount.

Term

APY

Minimum Deposit

6-month CD

2.00%

$2,500

1-year CD

2.40%

$2,500

18-month CD

2.45%

$2,500

2-year CD

2.45%

$2,500

3-year CD

2.45%

$2,500

4-year CD

2.45%

$2,500

5-year CD

2.50%

$2,500

  • Minimum opening deposit: $2,500
  • Early withdrawal penalty:
    • CD terms that are less than 24 months — 90 days’ interest penalty
    • CD terms that are more than 24 months — 180 days’ interest penalty

Live Oak Bank currently offers the highest CD rates. This bank’s minimum deposit requirements also seem to be right on par with other bank’s minimum deposit requirements. Currently, the best CDs out there have minimum deposit requirements both above and below Live Oak Bank’s $2,500 benchmark.

Only U.S. citizens and permanent residents are eligible to open these accounts. It’s a relatively straightforward process to open a CD: Simply complete the forms online, provide any needed documentation (such as your current bank account details), and wait for an account approval. Once your account is open, you can transfer over your deposit, where it will be held for five days before officially launching your CD.

If you need to take out your deposit early, bad news: As with many CDs, you’ll face an early-withdrawal penalty at Live Oak Bank. If your original CD term was for six months, one year or 18 months, you’ll be charged 90 days’ worth of interest. If your original CD term was for longer than that, you’ll be charged a higher rate of 180 days’ worth of interest.

If you are able to resist the urge to withdraw your money early, congratulations! Your CD will automatically renew into a second CD with the same term length. However, don’t panic if that’s not what you want: You have up to 10 days after the CD has matured to withdraw your money penalty-free and park it in your own bank account (whether it’s with Live Oak Bank or not).

It’s easy to overlook Live Oak Bank for other larger, more established consumer banks like Ally or Discover Bank. But Live Oak has some of the best CD rates around, and the best savings account available on the market today.

Lest you be scared away by its smaller name, consider this: This tiny-but-growing bank is getting rave reviews from customers and employees alike. It carries an “A” health rating, and has a top-notch online banking portal. About the only thing missing is a checking account to let you seamlessly do all of your daily banking with this great company.

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Lindsay VanSomeren
Lindsay VanSomeren |

Lindsay VanSomeren is a writer at MagnifyMoney. You can email Lindsay here