How to Invest Like the Best: 8 Strategic Approaches for Managing Excess Retirement Savings

Congratulations on reaching the enviable position of oversaving for retirement. While most people stress about having enough, your challenge is quite different—figuring out where to park your surplus to keep it working hard without unnecessary risk.

Tax Strategy Comes Before Investment Selection

Before you move a single dollar, Michael Finke, a CFP and wealth management professor at The American College of Financial Services, emphasizes one critical decision: taxable or tax-sheltered accounts? This choice will shape your entire investment strategy.

The math is sobering. If you’re still employed in a high tax bracket—say 24% federal plus 6% state—that 5% CD yield suddenly becomes just 3.5% after taxes hit your ordinary income rate. That’s a 30% haircut on your gains. It’s why high earners often overlook the obvious plays. Understanding this dynamic is how savvy investors protect their wealth.

Maximize Tax-Sheltered Contribution Room

Once you hit 50, tax shelters become your secret weapon. Catch-up contributions let you stash significantly more into 401(k)s and other qualified accounts annually. This isn’t just about compliance—it’s about padding your savings in buckets where growth compounds tax-free. The longer your money sits untouched, the more compounding works in your favor.

High-Yield Savings: The Safety Play With Real Returns

According to Christopher Stroup, CFP and owner of Silicon Beach Financial, high-yield savings accounts have become genuinely competitive. Rates hovering near 5% actually outpace inflation—the silent wealth eroder in retirement. The kicker? FDIC insurance up to $250,000 per beneficiary means zero sleepless nights. Traditional savings accounts? They’re basically paying you pennies. With high-yield alternatives, your excess cash finally earns its keep.

The CD Ladder Strategy

Stroup highlights a less flashy but effective tactic: the CD ladder. You build it with certificates of deposit at various maturity dates and rate levels. As each CD matures, you either reinvest or access the cash penalty-free. This creates consistent returns throughout the ladder’s life while maintaining liquidity for unexpected expenses. It’s structured yet flexible—exactly what excess retirement capital needs.

Bonds and Treasury Instruments: The Government-Backed Route

Short-term bond funds inside employer accounts rival high-yield savings account safety but offer superior tax treatment. Vanguard’s short-term bond funds have paid as much as 4.7-4.8%, Finke notes. Within tax-sheltered accounts, this becomes a legitimate core holding.

Series I-Bonds deserve special attention. You can invest $10,000 per spouse annually, purchased directly through TreasuryDirect.gov. Taxes on interest defer until redemption—perfect for those expecting lower tax brackets in retirement. Inflation protection is built in.

Treasury bills (under one-year maturity) near 5% yields shouldn’t be ignored either. Best part? While you eventually pay federal tax, state taxes don’t apply. That efficiency advantage compounds quickly for high-net-worth retirees looking to invest like the best.

Multi-Year Guaranteed Annuities (MYGA)

Think of MYGAs as CD cousins with longer timelines. Unlike CDs, they’re not FDIC-insured, but highly-rated insurance firms (many 200-year veterans) back them. Buy a 5-year MYGA at 62? Lock in 5% for five years, then pay taxes only when withdrawing—potentially at a lower rate post-retirement. This gives you timing flexibility on tax realization. It’s powerful for those wanting predictable returns with strategic tax planning.

Money Market Funds for Accessible Stability

Money market funds sit among the safest excess-capital homes. They invest in short-term debt and CDs, offering stability with liquidity comparable to checking accounts. Returns are modest but outpace traditional savings accounts substantially. Stroup suggests these for investors seeking low-risk, accessible alternatives to high-yield savings.

Deferred Income Annuities: Buy Future Income Today

Finke’s final suggestion flips the script: convert excess savings into guaranteed lifetime income. Spend $100,000 today, receive roughly $10,000 in annual income for life starting in five years. Social Security plus this annuity income creates a psychological security blanket. The money compounds tax-deferred inside the annuity, then flows out as income—more tax-efficient than holding cash in CDs.

The Path Forward

Combining one or more of these approaches protects your wealth while building the legacy you envisioned. Whether through tax-advantaged accounts, inflation-protected securities, or income-generating instruments, the goal remains constant: let your money work safely and efficiently for decades to come. That’s how disciplined savers truly invest like the best.