Most women say they can save outside of retirement, but many keep that cash in low-yield places that may be losing value when adjusted for rising prices. A recent Vanguard survey suggests reassessing where short-term savings live matters now more than ever because inflation is outpacing returns on many everyday accounts.
Vanguard asked 1,007 adult women in April about their non-retirement savings and found that 71% felt at least somewhat confident they could put money aside. At the same time, about half — 51% — store those funds in traditional checking or savings accounts or hold physical cash.
Nearly half of those who keep cash in bank accounts reported balances earning under 3% annually, a pace below current inflation, and 26% said they didn’t know their account’s interest rate. That gap between perception and performance worries advisers.
“You may move money from checking into a savings account at the same bank without realizing the yield is minimal,” said Vanguard adviser McClanahan. The implication: where you park liquid cash affects how much buying power it retains.
Inflation is running above the Federal Reserve’s target
The consumer price index rose 3.3% year over year in March, up from 2.4% in February, driven in part by higher energy prices since late February amid geopolitical tensions. That pace sits well above the Fed’s 2% inflation goal.
When an account’s interest rate trails inflation, the real value of that money — what it can buy — declines over time. Cash provides safety and quick access, but not all cash accounts protect against price increases.
Options for short-term savings
Advisers generally recommend avoiding risky investments for funds you’ll need within a few years, but you don’t have to settle for the lowest returns. Two commonly suggested alternatives are high-yield savings accounts and money market accounts.
Recent tracking by Bankrate shows some top high-yield savings accounts paying roughly 4% annually, versus a national average near 0.59%. Money market accounts often allow check-writing or debit access but can come with higher minimum balance requirements.
- High-yield savings — Typical top offers around 4%; low risk and easy to link to checking, good for emergency funds.
- Money market accounts — Similar yields to high-yield savings in many cases, with added transactional features; may require higher minimums.
- Certificates of deposit (CDs) — Fixed terms from months to years; higher yields for longer terms but penalties for early withdrawal.
- Short-term Treasury bills — Very low credit risk; 3-month bills recently yielding about 3.6%; liquidity varies by instrument.
- Series I savings bonds — Rate adjusts for inflation; recent half-year rate was 4.26% for bonds bought May 1–Oct. 31; restricted access for one year and a penalty of three months’ interest if redeemed before five years.
“Money markets and high-yield savings give you more immediate access,” said Braxton, another financial adviser. “Some people accept less liquidity — for example in a CD or Treasury — to earn more.”
Current averages illustrate the trade-offs: the national one-year CD yield hovers below some promotional offers (Bankrate lists an average around 1.92% for one-year CDs), yet select institutions may advertise rates at or above 4% for certain terms. That variability rewards comparison shopping.
Practical steps for savers include checking the interest rate on current accounts, comparing nationally available high-yield options, and thinking through how soon you’ll need the money. For government-backed I bonds, remember purchases are made through TreasuryDirect, the minimum is $25, and the electronic purchase cap is $10,000 per person per calendar year.
Keeping cash safe is about more than avoiding loss — it’s also about preserving purchasing power. With inflation above the Fed’s target, small changes in where you hold short-term savings can have a meaningful effect over time.
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Jordan Keller specializes in analyzing the US financial markets. With concrete recommendations, he helps you secure and boost your investments by providing strategies that adapt to market fluctuations.