Four Simple Ways to Protect Retirement Savings

Barbara Marquand | guest writer for GoTalkMoney

With the stock market on a roller coaster, savings rates at paltry levels, and a debt crisis brewing overseas, the reins of your financial life may have been pulled from your hands.

Rather than fretting about things you can't control, focus on the things you can. Here are four simple steps to take:

Save Your Money: Avoid Bank Fees

Avoid conditions that spark bank fees. If you're paying a monthly maintenance fee on checking, investigate what you need to do to avoid the fee, such as maintaining a higher balance. Or find a free checking account at another institution.

Just say no to overdraft services touted by banks, and find a less-expensive alternative for overdraft protection, such as linking your checking to your savings account. Starting June 1, banks must get your permission to let you overdraw your bank account with your debit card and charge you a fee for the privilege. Those fees average about $30--money you could put to better use in lean times.

Compare CD Rates Online

Sure CD rates are miniscule, but that should give you even more incentive to get the best CD rates possible. With online tools its easier today than ever before to compare rates offered by multiple institutions. Check offerings at your local banks, and then compare them to those listed online.

Don't jump for higher rates without reading terms and conditions carefully. CDs come in a wider variety than they did a generation ago, and some are far more complex than you might expect. The notion that higher returns mean higher risk applies to CDs as much as it does to stock investments. Indexed CDs, for instance, which are tied to a market index like the S&P 500, promise higher potential returns than standard CDs, but they also come with longer terms, stiffer withdrawal penalties, and the chance of zero returns if the index tanks.

Earn Interest Where You Can

Consider a high-interest checking account. Yields sometimes beat those of savings accounts if you meet the account requirements. Typically, to earn the interest you must make a certain number of debit card purchases a month--usually 10 to 12--get all your statements by e-mail, and use direct deposit and automatic bill pay.

Meanwhile, how much interest are you making on your money market or savings account? Compare that to rates offered by online banks, which because of lower overhead, typically offer higher yields than traditional banks. The accounts are easy to set up and usually require no minimum balance.

Ensure Investments Safety: Check FDIC Insurance Coverage

Let the woeful tale of former IndyMac Bank customers remind you to make sure your bank deposits are within FDIC limits, now $250,000 per depositor per institution through 2013. Some 8,000 customers were caught underinsured when IndyMac failed in July 2008. Remember, that was when bank failures were a rarit, not a weekly event. At the time, the FDIC insurance limit was $100,000. Three months later, Congress raised the limit to $250,000, but the action came too late for IndyMac customers. An FDIC-backed House bill is pending that would extend the higher level retroactively to banks that failed after Jan. 1, 2008, including IndyMac and five others. Still, even the higher limit won't help some customers, who reportedly lost as much as $1 million. They say bank representatives assured them they were fully insured because of the way the accounts were set up.

Bear in mind the insurance level will drop to $100,000 in 2014, a key consideration when you purchase long-term CDs that will expire after the lower limit is in effect.

As the economy continues its slow crawl to recovery, minding the financial details you can control will ensure the best possible future for you and your family.

Disclaimer:This content is not provided or commissioned by American Express. Opinions expressed here are author's alone, not those of American Express, and have not been reviewed, approved or otherwise endorsed by American Express. This site may be compensated through American Express Affiliate Program.

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