Financial Basics · Savings & Cash

Savings Accounts

Definition

Savings vehicles for money you need in the next 0–5 years include high-yield savings accounts (HYSA), money market funds, certificates of deposit (CDs), Treasury bills, and I-bonds. Each has different tradeoffs between liquidity, yield, and safety.

Why it matters in retirement

Retirees typically keep 1–3 years of living expenses in cash to avoid selling stocks during a downturn. Where you keep that cash matters — a HYSA at 4.5% beats a traditional bank at 0.01% by $4,500/year on $100,000.

Key Numbers: 2026

HYSA yield (recent)
~4.0–4.5%
Money market fund
~4.5%
1-yr Treasury yield
~4.3%
I-bond fixed rate (recent)
~1.2%

Pros

  • Principal preservation
  • FDIC/SIPC insurance
  • Immediate liquidity (most)
  • No market risk

Cons

  • Below-inflation returns historically
  • Opportunity cost vs stocks/bonds
  • FDIC limits per institution
  • I-bond purchase limits

Common mistakes

  • Leaving cash at a big bank paying 0.01%
  • Keeping too much in cash (inflation-dragging)
  • Not spreading cash across FDIC limits at larger balances
  • Ignoring T-bills — state-tax-exempt and often higher yielding than CDs

Related

Treasury Bonds

Treasury securities are debt obligations of the US federal government. T-bills mature in 1 year or less, T-notes in 2–10 years, T-bonds in 2…

CD Ladder

A CD ladder splits your cash across multiple certificates of deposit with staggered maturities (e.g., 1, 2, 3, 4, 5 years). As each CD matur…

Emergency Fund

An emergency fund is liquid cash reserved for unexpected expenses — job loss, medical bills, home repairs. The conventional guideline is 3–6…

Bonds

A bond is a loan you make to a government or corporation. In exchange, the issuer pays you periodic interest (coupon) and returns your princ…

Want help applying this to your situation?

Take the free Retire Ready Score to see where you stand.

Take the Free Assessment