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6 Savings Strategies for an Extremely Low-Yield Environment Thumbnail

6 Savings Strategies for an Extremely Low-Yield Environment

For years, we have seen falling interest rates. Now, we’re in a time where a 10-year treasury is less than 1% and your cash in the bank is making you next to no interest. 

So if you’re already retired or nearing retirement, what can you do about low yields? 

There are several strategies that you can implement to help you retire right and make your retirement even better.  

Here are six tips to help you increase your net cash flow and net returns in today’s extremely low-yield environment.

  1. Delay Social Security

If you are in retirement or are approaching the normal retirement age, one thing you can do is delay your social security until you’re 70 years old. When you do this, your benefit payout increases by 8% a year. When you’re in a low-interest-rate environment like we are right now, growing that money by 8% a year is a significant increase. 

While most people want to take their social security benefit as soon as possible, ask yourself: Do you need the money? Are you still working? What is your health like?

There are also other factors to consider. For example, will your spouse be collecting more than half of your social security at retirement? That could be another reason to delay taking it. To find out what else you should consider about delaying or collecting your social security benefit, listen to our social security podcast series.

Delaying your social security from the normal retirement age, which is 66 to 67, for another three or four years until you’re 70, could be a 32% increase. It’s a huge difference, but keep in mind that there is a breakeven because you’re not getting that money earlier.

Again, there may be reasons why you may want to take your social security earlier versus age 70, so consult with a professional like us and do an analysis to find what’s right for you.

  1. Refinancing Your Mortgage

If you’re planning on staying in your home for a long time, refinancing your mortgage and lowering your expenses is a great way to take advantage of low yields in this environment.

If you can drop your mortgage rate by 2% over a long period of time, that’s a significant amount of savings.

However, if you’re looking to refinance, make sure you qualify. For example, you might not qualify if you’re not working. Banks like Wells Fargo also have rules in place where you need to have a million dollars in assets or mortgages with them in order to refinance one of their large loans. 

So if refinancing your mortgage is something that interests you, work with somebody who can help you check if the bank has certain rules around refinancing and if this is something you can benefit from.

  1. Pay Down Your Mortgage

If you’re lucky enough to have some positive cash flow, you might be wondering where to put it. 

Do you put it in the bank? Do you buy bonds? Do you put it in the stock market? 

One option is to pay down your mortgage. When you pay down your mortgage, you get a guaranteed rate of return.

Let’s say your mortgage is 4.5% and you don’t want to refinance because you don’t have many years left on your mortgage or maybe you’re moving soon. Making extra payments on your mortgage now can lower the amount of time that you’ll have to pay into the mortgage. 

After all, what’s better than knowing that you have less of a mortgage that you owe?

  1. Review Your Expenses

This one may seem obvious, but with the current pandemic keeping us at home more often than not, now is a great time to review your expenses and save some more money. 

Even if you’re not making as much on your savings because of interest rates, you can make up for it by putting a little bit more away during your pre-retirement years, which will only help when you get to your retirement years.

If you’re lucky enough and are still making money and spending less, now is also a great time to save more money or increase what you can do in your 401(k) plan or in your retirement account because now you’re probably getting a deduction on those savings.

  1. Look at Risk and Rewards

Many people are currently feeling jittery about the stock market and what they should do about their investments. But if you don’t want to have your money in the stock market, where are you going to get any returns? If you take your investments out and put it in the bank, what is your bank paying you?

Instead, there are a few things you could do to get some higher yields.

One of these things is to go out a little further in duration with your investments by buying a bond that matures in a longer period of time. With this, you can get a higher rate of return. 

However, if interest rates go back up and you’re sitting with a bond that is six to 10 years in duration, the value may go down. So, look at the risk and rewards of what you might buy and be careful with how you go about that.

Whether you’re using AAA treasuries, UAE bonds, or investment-grade triple-B bonds, whichever way you put together your bond portfolio, just make sure that it is diversified. 

At Heller Wealth Management we’re putting together a lot of laddered bonds for clients. This means we’re buying bonds that mature in one, two, three, all the way up to 10 years. That way, as each year comes due, the bonds mature. If you want to learn more about bonds and how we approach this type of investment, check out our podcast on it here


In addition, one of the reasons why the stock market might be holding ground or staying put during this time of crisis is because a lot of companies are paying some nice dividends.

Even if you’re getting 2% in dividends, that’s still more than the less than 1% that you have in the bank account or from the treasury. Of course, the market fluctuates up and down, but getting dividends on some of your investments could be beneficial.

So, a great way of increasing your returns in a lower interest rate environment is by looking at your stock portfolio and looking at the dividend rate. But don’t just look at the income strategy — look at your total return versus the income strategy and where you can increase some yield within your risk tolerance.


  1. Manage Your Cash

While you might not be making much money at your bank, there are some online banks out there that are FDIC insured and whose rates are averaging around 1%. While it might not sound like a lot, 1% is better than 0%. 

For those who have a significant amount of cash, we have a program called Max My Interest, where your money automatically moves to the highest-earning FDIC insured banks each month so that your money is making the most for you. If you’d like to learn more about this program, give us a call!

While our current financial environment might not be looking like sunny skies thanks to our low-interest rates, there are still things you can do to maximize your dollars now to ensure that you’re able to retire right — like looking at your social security, considering refinancing, paying down your mortgage, and reassessing your expenses to see how you can save some money. 

If you would like some help assessing your savings and portfolio to make sure they’re working for you, be sure to reach out to us at Heller Wealth Management at (631) 293-2806 or on our contact page.