Baby boomers have spent multiple decades working hard and building up their savings. The median savings of baby boomers is $202,000. You can have that cash work hard for you in a high-yield savings account instead of having it sit in a checking account.

Baby boomers can make a lot of extra money in 2025 just by capitalizing on higher APYs. 

High-Yield Savings Accounts vs. Stocks

Stocks can generate higher long-term returns than high-yield savings accounts. These assets make more sense for young investors who are a long way from retirement.

However, many people opt for more defensive investments as they get older. They don’t have as much time to withstand market downturns before they have to withdraw funds from their portfolios. The focus shifts from accumulating wealth to preserving the nest egg. High-yield savings accounts offer practically risk-free returns due to the FDIC. 

Savings Rates Have Increased Significantly

The Federal Reserve’s rate hikes set the motion for attractive APYs for high-yield savings accounts. It’s possible to find high-yield savings accounts with APYs above 4.00%, especially if you compare online banks.

Many baby boomers have accounts with more traditional banks like Citibank and Chase. They didn’t have online banks as an option and have gotten comfortable with their current accounts.

However, exploring a bit can get you more mileage out of your money. Baby boomers can make small changes and deposit some of their money into a high-yield savings account from a different institution instead of moving all of their funds. It may eventually make sense to move all of your funds from a low-yield account to a high-yield account once you get more comfortable with the new bank account.

How Much Can You Earn with 2.00% APY?

 

The median savings account is $202,000 for baby boomers, and a 2.00% APY can give you plenty of mileage. That rate would result in an additional $4,040 in 2025. Then, the balance would become $206,040 by the end of the year.

The great thing about interest is that it compounds. In 2026, a $206,040 balance with a 2.00% APY results in $4,120.80 in interest income. The savings account would then be valued at $210,160.80.

How Much Can You Earn with 3.00% APY?

 Your earnings will go up if you secure a high-yield savings account with a higher APY. Some banks offer savings accounts with 3.00% APY. A $202,000 balance would yield $6,060 in 2025.

This example demonstrates the impact of a few extra points on your APY. The difference between a 2.00% APY and a 3.00% APY is an additional $2,020. The difference becomes more substantial if you have a 0.50% APY and could be getting a 3.00% APY.

At the end of 2025, you would have a $208,060 balance. If you had the same 3.00% APY in 2026, you would earn $6,241.80 and end up with a $214,301.80 balance.

How Much Can You Earn with 4.00% APY?

You’ll earn even more interest each year if you find a high-yield savings account with a 4.00% APY. Yes, these accounts exist, and you don’t have to park your money into a long-term CD to get this rate.

Most consumers will find these yields with an online bank. These financial institutions can offer more competitive APYs since they have less overhead than traditional banks.

A $202,000 balance with a 4.00% APY would generate an extra $8,080 in 2025. That 1-year return is almost higher than what a 2.00% APY savings account can do in two years. 

After the first year of 4.00% APY, a $202,000 balance becomes $210,080. If you did the same thing in 2026, your $210,080 balance would generate an additional $8,403.20. That translates into a $218,483.20 balance at the end of 2026.

How Compound Growth Impacts Total Returns

A high balance makes it possible to spot the difference between a 2.00% APY and a 4.00% APY right away. However, the difference will widen over the next few years, especially if you compare them to more traditional rates like 0.50% or 1.00% APY.

After 10 years, a $202,000 savings account with a 0.50% APY turns into a $212,330.31 balance. Your account will grow faster in two years with a 3.00% APY or a 4.00% APY.

It”s not much more exciting for a 1.00% APY, which turns a $202,000 savings account into $223,133.67. It’s a higher return than 0.50% APY, but it’s still not that exciting.

Risk-free returns start to get more meaningful at 2.00% APY, where a $202,000 balance becomes $246,236.87 after a decade. A 3.00% APY account with the same conditions turns into $271,471.11 after 10 years.

Finally, a 4.00% APY with the same balance turns into $299,009.35 after a decade. While the high-yield savings account with 4.00% APY becomes valued at $299,009.35 after a decade, a 0.50% APY account only turns into $212,330.31 during the same amount of time.

High-Yield Savings Accounts Can Keep Up with Inflation

Baby boomers know more than most people that things get more expensive over time. Cars and houses don’t cost what they did in the 1980s, and inflation has been a constant in the growing economy.

Inflation typically grows at 2% per year, which puts low-yield savings accounts out of contention. A 0.50% APY will underperform inflation and will decrease your purchasing power over time. However, a 4.00% APY exceeds inflation and will boost your purchasing power, not just your bank account’s nominal value.

You should periodically look for better financial products and services. Doing so can help you save and earn additional money. Banks with high-yield savings accounts may also have more competitive APRs on loans and lines of credit. Meanwhile, banks that have low APYs for their savings account may restrict your ability to save or earn additional money through their other products.

It’s good to explore, and doing so in 2025 can help you earn an extra $8,080 from a high-yield savings account. That’s the figure you’ll reach if you have a $202,000 balance with a 4.00% APY.

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