Prevent Outliving Your Savings with the Best Distribution Plan.
Our savings drawdown calculator helps you sustain your income by creating a plan that prevents you from outliving your savings. Before you buy a retirement plan, use our calculator to shop for the best options and see how your savings will last over time. Our brokers are available to assist you online with no obligation, ensuring you make an informed decision.
Our Favorite Rates To Grow Your Money
These are our preferred accounts because the savings, money market, and CDs only require $1 to open. This allows you to spread out risk in case a bank or credit union closes in the future. The fixed annuity offers one of the highest interest rates, provides penalty-free annual withdrawals for liquidity, and typically has a longer term than a CD.
| Term | Savings Account | Institution | APY |
|---|---|---|---|
| N/A | Money Market Account | SkyOne Federal Credit Union | 4.16% |
| N/A | Savings Account | Northpointe Bank | 4.30% |
| 6 Months | CD | Merrick Bank | 4.16% |
| 12 Months | CD | NexBank | 4.55% |
| 2 Years | Fixed Annuity | Oceanview Harbourview MYGA | 5.15% |
| 5 Years | Fixed Annuity | Wichita National | 6.40% |
Disclaimer: This is a comparison review. The Annuity Expert is not associated with a bank or credit union. We aim to help you find the highest interest rates for your savings. We may receive a small referral fee if you purchase something using a link in this guide.
How to Allocate Your Pre-Retirement Savings
Use this framework to divide your liquid savings by purpose. Tailor it to your income needs, risk comfort, and timeline.
| Category | Suggested Range | Purpose | Best For |
|---|---|---|---|
| Emergency Fund | 5–10% | Cover 6–12 months of expenses | Everyone |
| Short-Term Cash Goals | 10–25% | Spending within 1–5 years | Travel, cars, down payments |
| Growth Investments (Brokerage) | 30–50% | Build long-term wealth | 10+ year timeline; no need for liquidity |
| Life-Only SPIA | 5–15% | Generate income before age 59½ | Early retirees avoiding IRS penalties |
| Fixed Annuity (MYGA) | 5–20% | Guaranteed interest without market risk | Tax-deferred, conservative savers |
| Permanent Life Insurance | 5–15% | Tax-free wealth transfer + cash access | High earners with legacy or estate planning goals |
| Other | Varies | Business, real estate, long-term care | Entrepreneurs, landlords, healthcare planners |
1. Emergency Fund
What it is: Liquid savings in a high-yield savings account or money market fund.
Why it matters: Even with large savings, things like job loss, health issues, or business slowdowns can hit hard.
Pros: Easy access, full safety.
Cons: Minimal returns.
Ideal for: Everyone, no exceptions.
Not ideal for: Growth or long-term wealth building.
2. Short-Term Cash Goals
What it is: Savings for known expenses within the next five years. Could be a home renovation, tuition, car, or wedding.
Best tools: Laddered CDs, U.S. Treasuries, short-term MYGAs (multi-year guaranteed annuities).
Pros: Principal protection and predictable interest.
Cons: Returns are modest; funds are usually locked for 1–5 years unless structured for liquidity.
Ideal for: People who want a return but can’t afford market loss.
Not ideal for: People who want higher returns or don’t have near-term goals.
3. Growth Investments (Brokerage Accounts)
What it is: Taxable investment accounts holding ETFs, stocks, or mutual funds.
Goal: Long-term capital appreciation.
Pros: High growth potential, flexibility.
Cons: Taxable gains, subject to market volatility.
Ideal for: Those who already have safety and liquidity covered and want market exposure.
Not ideal for: Risk-averse individuals or short-term investors.
4. Life-Only Single Premium Immediate Annuity (SPIA)
What it is: Exchange a lump sum for guaranteed lifetime monthly payments that start immediately and end at death—no refund to heirs.
Why it’s powerful before retirement:
- If you’re under age 59½, using a life-only SPIA funded with non-qualified cash avoids the 10% IRS early withdrawal penalty.
- It delivers the highest possible monthly income from any annuity because there’s no period certain or refund rider.
- Cash flow now. Many FIRE (Financial Independence, Retire Early) savers use SPIAs to replace paychecks when leaving work early.
Pros:
- Highest guaranteed income available for your dollar
- No early withdrawal penalties on non-qualified funds
- Peace of mind with monthly paychecks for life
Cons:
- No access to principal once purchased
- No refund to beneficiaries unless paired with life insurance
- Irrevocable decision
Ideal for:
- People retiring early who need reliable income without tapping 401(k)s
- Individuals with large taxable savings who want simplicity and security
- Anyone seeking a way to avoid sequence-of-returns risk before retirement
Not ideal for:
- Anyone who may need their cash back
- People uncomfortable with the idea of giving up control or leaving nothing behind
Pro Tip: Pair with permanent life insurance to restore the lump sum to your heirs. This solves the biggest drawback—losing the death benefit.
5. Fixed Annuities (Multi-Year Guaranteed Annuities – MYGAs)
What it is: An insurance-based CD that pays a guaranteed rate for 3–10 years. Grows tax-deferred.
Funding options: Non-qualified savings or IRA rollover
Pros:
- Better rates than bank CDs
- Safe from market loss
- Tax deferral (non-qualified money only)
Cons:
- Withdrawal penalties during the term
- No market upside
Ideal for:
- Conservative investors looking for better than cash
- IRA owners not yet subject to RMDs
Not ideal for:
- Those needing liquidity or market participation
6. Permanent Life Insurance
What it is: Life insurance that builds cash value (Whole Life or Indexed Universal Life).
Purpose: Grow money tax-deferred and access it tax-free via policy loans. Also ensures a tax-free legacy.
Pros:
- Cash value can be used tax-free
- Death benefit protects your family
- Can help offset SPIA trade-offs
Cons:
- More expensive than term life
- Requires careful design and funding
- Slow early growth
Ideal for:
- High-income earners looking for additional tax-advantaged growth
- Business owners planning for succession
- People who’ve already maxed out 401(k)s and Roth IRAs
Not ideal for:
- People on a tight monthly budget
- Anyone who can’t commit for the long term
7. Other Tools Based on Lifestyle Goals
Real Estate: Use excess savings as down payments or full cash buys for rental property income.
Business Investment: If you’re a business owner, reinvesting cash into your company may provide your best ROI.
Long-Term Care (LTC) Annuities or Insurance: Planning for medical expenses is wise, especially if your family history includes dementia or assisted living care.
Book A Free Consultation
Get help from a licensed financial professional. This service is free of charge.
Let Us Answer Your Questions
Not quite ready for a meeting, but you have a question that needs answering? We’re happy to help. Leave an inquiry below, and one of our staff will respond via email.