Exploring Savings and Tax-Advantaged Account Options for Americans Over 60 in 2025

For Americans over 60 planning their retirement in 2025, securing both growth and tax efficiency in savings can be important to ensure financial stability and maintain a comfortable lifestyle. Proper planning helps manage risks and maximize returns over time, especially amid changing economic conditions.

Understanding High-Interest Savings Accounts for Potential Growth

High-yield savings accounts (HYSAs) provide an option for savers seeking to earn competitive interest without risking principal. In 2025, some accounts offer:

Interest Rates Around 4% to 5.00% APY: Certain providers like Varo Money, Axos Bank, SoFi, and Presidential Bank have advertised APYs in this range, compared to a national average savings rate near 0.40%. These rates are subject to change and can vary by institution.
No or Low Fees with Low Minimum Balances: Many HYSAs through online banks come with no monthly maintenance fees and low or no minimum deposit requirements, providing accessibility for retirees managing income streams.
FDIC and NCUA Insurance Coverage: Deposits are insured up to $250,000 per institution, which helps protect funds. Depositors with larger balances might consider spreading money across several banks to maintain insurance coverage.
Taxable Interest: Interest earned is generally taxable as ordinary income. Financial institutions issue 1099-INT forms reporting interest above $10 annually, which should be accounted for in tax planning.

Opening a high-yield savings account usually requires an online application with basic identification (government ID, proof of address) and initial funding from an existing bank account. Mobile and online banking options help retirees manage accounts conveniently.

High-yield savings accounts can be suited for emergency funds, short- to medium-term goals, or as a liquid reserve alongside other retirement income sources.

Tax-Advantaged Accounts to Explore for Retirement Savings and Income

Americans over 60 may also consider various tax-advantaged accounts designed to support retirement income. These accounts offer preferential tax treatment on contributions, earnings, or withdrawals, which may help preserve wealth under certain circumstances.

Roth IRA Overview

The Roth Individual Retirement Account (IRA) is a commonly used tax-advantaged retirement account for those 60 and older as of 2025:

Contribution Limits: Individuals age 50 and older can contribute up to $7,000 annually in 2025, including a $1,000 catch-up contribution, subject to IRS rules and income eligibility.
Tax Features: Contributions are made with after-tax dollars, so qualified withdrawals after age 59½ and after the account has been open for five years are tax-free. Gains accumulate tax-free under these conditions.
No Required Minimum Distributions (RMDs): Unlike traditional IRAs, Roth IRAs do not require mandatory withdrawals starting at age 73, allowing for potential extended tax-free growth.
Eligibility: Individuals must have earned income to contribute. Some may convert funds from traditional IRAs or 401(k)s to Roth IRAs as part of retirement tax planning.

Roth 401(k) and Solo Roth 401(k) Features

For retirees still working or self-employed, Roth 401(k)s may provide additional savings opportunities:

Contribution Limits: In 2025, the base limit is $23,500, with a $7,500 catch-up for those 50 and older. Additionally, ages 60 to 63 may make an extra “super catch-up” contribution up to $11,250.
Tax Treatment: Similar to Roth IRAs, contributions grow tax-free and distributions meeting IRS rules are tax-exempt.
No RMDs Starting in 2024: SECURE 2.0 legislation eliminated required minimum distributions for Roth 401(k) accounts, allowing longer tax-advantaged growth.
Self-Employed Option: The Solo Roth 401(k) is available to self-employed individuals seeking higher contribution limits with tax advantages.

Health Savings Accounts (HSAs) for Medical and Retirement Expenses

For eligible seniors with qualifying high-deductible health plans, HSAs offer notable tax benefits:

Contribution Limits: Up to $4,300 for individuals and $8,550 for family plans in 2025 (subject to plan eligibility). Contributions may reduce taxable income.
Tax-Deferred Growth: Earnings on investments in HSAs are generally tax-free while in the account.
Tax-Free Withdrawals: Withdrawals for qualified medical expenses are tax-exempt.
Post-65 Use: After age 65, non-medical withdrawals are penalty-free but subject to ordinary income taxes, allowing HSAs to function as a supplemental retirement savings tool.

HSAs may assist with managing healthcare costs and supplement retirement funding within applicable IRS rules.

Conservative Income Options With Tax Considerations

Some retirees may consider options that aim to provide stable income with tax advantages:

Municipal Bonds and Tax-Exempt Bond Funds: Interest earned is often exempt from federal income tax and may be exempt from state taxes depending on residency. These bonds generally have lower risk relative to other fixed income investments.
Indexed Universal Life Insurance (IUL): A permanent life insurance policy with cash value growth that is generally tax-deferred. Policyholders may access cash values through loans without penalties. While offering certain tax efficiencies and a death benefit, IULs typically have higher fees compared to term insurance and should be evaluated carefully.

Considerations for Retirement Savings and Investment Planning After Age 60

Diversify for Tax Efficiency: Using a mix of high-yield savings for liquidity, Roth accounts for tax-free growth, and HSAs for medical and retirement savings may help address various financial needs.
Tax Planning: Interest income from savings is taxable; Roth accounts may provide tax-free withdrawals if IRS conditions are met; HSAs have unique tax rules to consider. Coordinating withdrawals and contributions with anticipated tax rates is prudent.
Maintain FDIC/NCUA Insurance Coverage: Staying within insurance limits per institution can help protect deposits.
Employment Status Impacts Options: Working retirees might access higher contribution limits via employer plans; retirees may consider rollover or conversion strategies.
Evaluate Fees: Expense ratios on mutual funds, ETFs, and insurance policy fees can influence net returns and should be reviewed.

Summary

In 2025, Americans over 60 have access to several financial tools that may support savings growth with competitive interest and provide possible tax advantages for retirement income:

High-yield savings accounts offering elevated interest rates compared to average savings, subject to availability and changing rates.
Roth IRAs and Roth 401(k)s providing opportunities for tax-free income and flexible withdrawals without required minimum distributions under IRS rules.
HSAs offering triple tax advantages for qualified medical expenses and retirement funding.
Municipal bonds and certain life insurance products supporting conservative, tax-efficient income diversification.

Individuals should assess their personal financial situations, risk tolerances, tax brackets, and liquidity requirements. Consulting with a licensed financial advisor is recommended to develop a retirement savings strategy suited to individual needs.