MeganCookWeek1Homework

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Feb 20, 2024

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1 The Role of Certificates of Deposits in Retirement Planning The Role of Certificates of Deposits in Retirement Planning Megan Cook Charter College BA3520 Finance Fundamentals Greg Drakulich 4/31/23

2 The Role of Certificates of Deposits in Retirement Planning Financial planning for your day-to-day expenses can be tough and stressful at times, but what about the financial planning for your future retirement? This is a topic that is seldom thought about until the event is vastly approaching. This paper will help give you some options to think about with the information about compound interest when investing for retirement. The first thing to consider when mapping your financial planning journey for retirement is to figure out your retirement number or age. Consider the life that you live now and how much it costs to sustain. Is this the same way you want to live when you retire? Or are there more things you would want to do like travelling? This should be considered alongside the cost of the United Stated 3.5% inflation rate in 20 years time. (Forbes 2020) When you no longer are receiving paychecks from your job because you are retired, what next? How are you able to sustain your cost of living? This is where compound interest can help build the money in your savings account more effectively. Compound interest is the earnings that you can receive from your savings account. In this process you can earn interest on top of your interest by adding to your principle balance. There are different options for compound interest all resulting in different factors that you should consider. Daily compounding results in interest being added daily to your account, weekly is every week, quarterly is every three months, and annually compounding is where interest is added to your balance every year, compared to semi- annually compounding which is twice a year. The best option for earning the max amount of interest in your compound interest options depends on your preferable outcome but the best to accrue the most quickly would be the daily compounding. This allows your account to acquire the largest amount of savings to earn as much profit as possible.

3 The Role of Certificates of Deposits in Retirement Planning As we wrap up this informative paper on compound interest and how it correlates to retirement planning, we were able to explore the different compound interest options and how they can be applied to your future financial planning. Compound interest can be an important tool when planning for retirement, the different options that can be utilized can help you accrue interest and secure your future goals.

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4 The Role of Certificates of Deposits in Retirement Planning References Gahvari, B. (2020, November 24). Council post: Compound interest and the road to retirement: How to fund your future . Forbes. Retrieved April 30, 2023, from https://www.forbes.com/sites/forbesfinancecouncil/2019/08/13/compound-interest-and- the-road-to-retirement-how-to-fund-your-future/?sh=1398db8f64d3 Kinetic financial reveals the top three retirement planning tips: Leading los angeles financial planning firm empowers americans to confidently plan for retirement. (2019, Sep 23). PR Newswire Retrieved from https://www.proquest.com/wire-feeds/kinetic-financial-reveals- top-three-retirement/docview/2295660434/se-2 Youngwon, N., & Loibl Cäzilia. (2021). Financial capability and financial planning at the verge of retirement age. Journal of Family and Economic Issues, 42 (1), 133-150. doi:https://doi.org/10.1007/s10834-020-09699-4

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