How you save for retirement is your decision. Some people put all of their money into a 401k and IRA. Others, believe it or not, keep loads of cash in their home. While you have the right to do what you want in terms of saving your money, you have to be smart about the choices you make.
Using an online savings account to save for retirement is becoming more and more popular as the years go by. There are many reasons for this, including:
- An online savings account can be a small part of your overall plan. Just because you are using one of these accounts does not mean you have to put all of your money in one. Instead, you can add cash as you see fit while still contributing to retirement plans and making regular investments.
- Easy to setup. If you are like most people, especially those nearing retirement, you are interested in accounts that are simple to setup and manage. With an online savings account that is exactly what you are doing. The steps to opening one of these accounts include: choosing a bank, filling out an application, and making an initial deposit. There may be other small steps along the way, but these are the most important ones. As you can see, it is nothing that should be difficult to figure out.
- Simple to transfer money in and out. Some people avoid online savings accounts because they think their money will be tied up for extended periods of time – this is not the case. You can link your online account to one with your local bank. From there, transferring and withdrawing money is a quick process. At the most, it will take three to five business days to move your money around.
- It is liquid. No matter who you are, during retirement there will be times when you need access to your cash in a hurry. Maybe you want to book a trip, or maybe an emergency came up at home and you need to take care of it right away. The ability to get at this money quickly and without jumping through hoops is a huge benefit.
- No risk involved. When you invest your money in the stock market, for example, you are taking a big risk. There is a chance that you can make a lot of money, but at the same time you could lose quite a bit as well. As you close in on retirement, you do not want too much of your money tied up in high risk investment vehicles. With an online savings account you never have to worry about losing money. You may only secure an interest rate of a couple percent, but at least you know your money is safe.
Have you considered using an online savings account to save for retirement? If not, the five benefits above may change your mind soon enough.