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Not financial advice and consult a financial professional but the way I would do it is attack the root cause of the problem: fear of loss. You correctly applied a risk-adjusted thinking but most people don’t understand risk or how to assess it properly.
So you have to compare apples to apples on what she cares about most: the loss but compared to another loss, i.e. purchase power and annual spend. When you spend money, it is the same as losing it technically from the perspective of a saver. So first I’d try to show her how long whatever her life savings would last in order to move the conversation to having to increase her return.
See below how to calculate but the TL;DR is to demonstrate that, depending on how much is needed annually and how long realistically she will live, 340k in TODAYS dollars earning 4ish % may not be enough, especially when her real return is basically 1% (last inflation print was over 4% and core is getting close to 3% IIRC). When you show her she might run OUT of money that fear of loss… loss of not being able to buy ANYTHING, will convince her to take some of her life savings and get a better return. You have to show her that she can loss more money because she won’t have enough because of inflation and cost of living. Furthermore, the interest rate she gets is not guaranteed to stay at 4ish%; while no one knows what FED is gonna do it’s more probable that there’s a strong desire to LOWER interest rates when inflation is sticky or even going to go up! That’s a double negative whammy for her current investment strategy; at least equities benefit with almost equal delta when inflation goes up even though it’s not real valuation.
I went ahead and calculated her current situation and compared to what she will need based on these assumptions: retire at 65, 80k annual income, 80% of current income need during retirement, 25 years it needs to last
Since she is 61, I assumed 4 years of returns:
Current strategy via CD:
Actual rate of return needed:
To do the calculations and show an apples to apples comparison, you need to use Time Value of Money equations and figure out Present Value of the cash needed. See below:
Here is a [link](https://www.calculatorsoup.com/calculators/financial/present-value-calculator.php) but you can use any time value of money calculator.
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So you need to use realistic assumptions on income needs and actuarial data. Typically, all else being equal, conventional starting points are 65 yoa starting point, 25 year runway, 75-80% of current income needs.
Then you have to use present value (PV) to determine what that looks like when she gets to age 65. Since she is close, or if she is going to retire past 65, you have to plug into a PV calculator.
STEP 1: calculate future value of current income need
As an example, taking median income of 80k:
Annual income need: 64k (80% of 80k), this is the PV input for PV calculations
Annual Interest rate (I/YR): typically you use a rate to match the increase in cost, or more in line with her fear, the LOSS of PURCHASING POWER, so this is inflation rate. This is difficult given current economics… long term over 100 years is 2.5% but last 10 years it’s 3.2-3.3%
Time period (n): assuming 65 years old will be retirement, it would be set to 4
Then solve for Future Value (FV). Whatever this number is it will be what she needs when she is 65 and accounts for increase in prices every year (aka inflation rate you used).
The answer you get for FV will then be the annual payment for Step 2.
Step 2: Calculate PV needed to support annual income needs calculated in step 1 and accounts for inflation (aka cost of living adjustments)
In order to ensure your rate of return isn’t washed out from inflation, you need to use a REAL RATE OF RETURN that accounts that inflation to see how long the principal will last.
So using PV calculator, your inputs would be
Time period (n): n= 25, again tricky because no one knows how long one is going to live, but conventional wisdom says to start at 25 years (use typical life expectancy rates (around mid 80s for women) with an extra 5 year buffer
Interest rate: this is where you have to adjust for inflation to get real return. If you don’t and use nominal return, if inflation goes up you will use more of your principal up faster and run out of money. So since you used SP500, the real rate of return long term is about \~7%. If you want to calculate on your own the real rate of return equation is:
(Rate of Return % - Inflation rate %) / inflation rate expressed as a decimal.
So if SP500 CAGR is 10%, inflation is 3%, the equation would be:
10-3 / 1.03 = 6.7961
So plug in 6.7961 as your I/YR input.
Then solve for Present Value (PV) because that’s what you need at the start of your 25 year survival range. This PV value is used in step 3 where you can find out what rate of return you need to get starting principle.
Step 3: Find out what rate of return you need.
This is step is critical to convince her. This step will either prove to her the earnings from the CD is not enough depending on whatever the result is.
Take the PV you calculated in step 2 and use it for Future Value in the calculator. Remember from step 2, we figured out what principle she need from day 1 of her retirement, 65. But she is 61 now so that’s why you set it to future value for step 3 because we are figuring out what rate of return she needs to have that amount when she is 65.
Input 4 for n and her current life savings (340k) for PV and solve for the interest rate (I/YR). If the result is MORE than her current CD rate this means she won’t have enough starting principle when she turns 65.

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