Start dreaming now about how you want to spend your time after you stop working. Maybe you want to travel the globe, buy a vacation home or open a flower shop on Main Street. Whatever your plans, it’s important to diversify your retirement investments and consider putting some of your savings in accounts that guarantee returns.

So what type of accounts keeps your plans for retirement safe while still earning more money? It’s simple: certificates.

What Is a Certificate?

Certificates are deposits you give to a financial institution for a set amount of time. In exchange, you’re guaranteed to receive a fixed rate of return on your deposits at the end of the term. You can open a certificate for a wide range of terms—from 3 months to 7 years. When your certificate matures (reaches the end of the term you set for it), you can choose to take out the money you’ve saved (plus the dividends you’ve earned) or let the total amount roll into another certificate so it can continue to earn dividends. Certificates are often an affordable option because they usually come with low or no fees.

Why Are Certificates Smart for Retirement Savings?

First, when you divert money from a taxable investment or savings account to a retirement-specific account like an individual retirement account (IRA), certificates are a way for you to reach your savings goals with a tax advantage. IRA certificates operate much like regular certificates by paying dividends on a fixed term, but with tax savings. You can get the most from your money with Traditional IRA1 certificates, which offer tax-deductible contributions (if you’re eligible) and tax-deferred growth, or Roth IRA2 certificates, which offer tax-free earnings and withdrawals (if certain criteria are met).

Additionally, certificates can help diversify your portfolio’s risk and provide guaranteed earnings without worry for the volatility of the stock market. As you start saving for retirement, consider certificates as part of your portfolio. They’re considered a safe, predictable and affordable investment because of the guaranteed rate of return you receive at the end of the term. Navy Federal Credit Union offers members a wide variety of certificate options. Create your perfect strategy and open a certificate today. Check out Navy Federal’s current certificate rates to get started.

1Withdrawals prior to age 59½ may be subject to ordinary income tax and a 10% tax penalty. Required minimum distributions must begin after age 70½. Otherwise, a penalty of 50% of the amount that should have been withdrawn, but wasn’t, may be imposed.

2Withdrawals from a Roth IRA are tax-free at retirement if the account holder is at least age 59½ and has held the account for at least 5 years. Premature withdrawals are subject to ordinary income tax and a 10% tax penalty.