Yep, CDs will securely and predictably erode your purchasing power at a slow rate over time. If you'd rather have your money slowly trickle away rather than be subject to the ebbs and flows of the market, be my guest. That's not the type of "safety" I seek...
That's what I'm saying, "safety" is relative. You simply guarantee your losses with a CD at today's rates. There are better guarantees out there than a guaranteed loss of 1%.
I know annuities get all kinds of hatred around here but looking at one makes sense if safety is a major priority. Here is one basic example using real numbers: If Kevj is 38 and he puts $100k into a fixed indexed annuity and takes income at the earliest possible point, age 56, it will pay him a projected $8278/yr with income guaranteed for life (plus a death benefit if he dies before life expectancy).
* If he lives 20 years beyond his 56th birthday (age 76) he will have collected $165,560. His simple annual ROI is 3.28%, basically keeping pace with inflation
* If he lives 30 years beyond his 56th birthday (age 86) he will have collected $248,340 returning 4.94%.
There is a lot of fine print with these things and the guarantees only go so far, but for a "risk off" portion of a portfolio it can make a lot of sense to explore annuities.
So in this case if we're looking at a $350k nest egg, setting aside $100k in a fixed indexed annuity for safety allows you to take more risk with the remaining $250k potentially further extending your returns with index investing or something more bond heavy/dividend heavy if generating income is the priority with this $350k. If it were me I'd be looking at all three... something like a $100k annuity, $100k low fee bond fund, $150k high dividend blue chip fund.