I just graduated from college and i am already planning my retirement. I know about 401k and i have that figured out already but in terms of money sitting in my bank account post retirement, assuming i have $250,000 what is the highest interest that i can earn with it? This money has to be available after 1 year so no 5 year CD and it has to be either FDIC secured or extremely low low low risk(assume it withstood the 2009 crash). Would 3% be possible? What is realistic?
I just graduated from college and I am already planning my retirement. ... in terms of money sitting in my bank account post retirement, assuming Ii have $250,000 what is the highest interest that I can earn with it?
Assuming you are 22, and will retire in 45 years at age 67. There is no way to predict interest rates. When I was 22 and just out of college I started putting money into a bank account to save for a down payment. The rate for a savings account was 6%. That means that every month I made 1/2 of one percent. Today that same credit union offers a money maker account with a minimum balance of $100,000 that pays 0.25% for the year. What I made in a month would take two years to make today.
Keep in mind we also can't estimate your pay in the last year before retirement, or the inflation rate for the next 45 years, or the mortgage rate, or the availability of Social Security, or the returns of the S&P for 45 years.
It is great you are starting to think about this today. But you will have to keep adjusting parts of your plan as the years go by: You may have to factor in children, your medical situation...
Even if the interest rates recover you may not want to put all your post retirement money in the bank. Most people can't sustain the required flow of money for their 30 years of retirement from savings accounts.
As for today. FDIC (or similar accounts from credit unions) will not have rates approaching 3%. It can't even approach that 3% rate via multi-year CDs. My credit union has a 6 year CD for almost 2%. If the goal of the money is safety then don't expect to find those high rates now. Some institutions may offer high rates without that FDIC protection, but that is risky.
And just a caution about that
super low risk: suppose that you lived during the late 70s and early 80s, when savers in the United States could get interest rates over 10% for savings. You put your money into an account in 1980, knowing that in five years, you'll have made a solid amount of interest. Except that you might have been smarter to convert your money to AUD and save in that currency because it would have moved from 0.88 in value to 1.43 in value (in principal only, not interest - when I look at the RBA's bank interest, it appears they were also paying double digit interest to savers).
Now, I get that this may not be the answer that you want to see because it means that if the interest rates were higher in the US, for savers, they might be higher elsewhere too, and it also means that what may appear to be a
super low risk could actually be a high risk.
With a 1/4 million you should be looking at staying fully invested and doing income draw down you can safely take 3 or 4 %
Basing your retirement income 100% on cash investments is very risky I can remember when inflation hit 15% in the UK and it has been at similar levels in the usa around 14% in 79.