{"id":10035,"date":"2024-03-23T07:57:55","date_gmt":"2024-03-23T11:57:55","guid":{"rendered":"https:\/\/kerryhannon.com\/?p=10035"},"modified":"2024-03-23T07:58:21","modified_gmt":"2024-03-23T11:58:21","slug":"high-interest-rates-are-super-news-for-americans-eyeing-retirement","status":"publish","type":"post","link":"https:\/\/kerryhannon.com\/?p=10035","title":{"rendered":"High interest rates are super news for Americans eyeing retirement"},"content":{"rendered":"
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A quick read of the tea leaves suggests that interest rates will stay higher for longer in 2024.<\/span><\/div>\n<\/div>\n<\/div>\n
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Those nearing retirement need to factor that into their investment decisions and even the bigger picture: Does “higher for longer” make this a good time to retire \u2014 or is it a reason to delay?<\/p>\n

The Federal Reserve’s June meeting is a more likely time for the first rate cut, but that timeline could be pushed back further if inflation stays steeper than desired.<\/p>\n

For now, the key interest rate remains steady in a range of 5.25% to 5.5%, a 22-year high \u2014 a sweet spot for investors, particularly those on the cusp of retiring.<\/p>\n

To explain what the interest rate hoopla might mean for that cohort, I talked to several wealth management advisers to get their takeaway.<\/p>\n

Read on Yahoo Finance<\/a><\/strong><\/p>\n

Read more:\u00a0<\/em>Retirement planning: A step-by-step guide<\/em><\/a><\/p>\n

Lock in today\u2019s high rates<\/strong><\/h2>\n

Your first move: If you’ll need cash savings to finance living expenses when you retire, then it\u2019s time to stockpile a chunk of cash in low-risk, fixed-income investments, such as Treasury securities and CDs. One easy way to do that is to lop off some of the profits from your equity holdings.<\/p>\n

\u201cHaving a higher interest rate is helpful because you\u2019ll receive more interest income with CDs and cash equivalents for emergency savings and a portion of your overall retirement asset allocation,\u201d said Daniel Soo, an executive wealth management adviser at\u00a0TIAA<\/a>. \u201cEspecially if you’re more conservative by nature.\u201d<\/p>\n

Some certificates of deposit and\u00a0high-yield savings accounts<\/a>\u00a0now offer rates of more than 5%. The most alluring CD rates \u2014 offered mainly through online banks \u2014 were recently around 5.5% for a one-year certificate.<\/p>\n

This will act as your buffer during the initial years of your retirement. If the market slips, you won\u2019t have to sell stocks at a loss to pay for your living expenses or get rattled by periodic gyrations.<\/p>\n

Read more:\u00a0<\/em>CDs vs. Treasury bills: Maximizing your savings<\/em><\/a><\/p>\n

‘Decision to retire goes well beyond rates’<\/h2>\n

Don\u2019t let this be the sole sign that it\u2019s time to retire.<\/p>\n

\u201cThere are many factors to consider when deciding when to retire,\u201d Nick Nefouse,\u00a0head of retirement solutions<\/a>\u00a0at BlackRock, told Yahoo Finance. \u201cIt\u2019s important to consider what your overall financial situation will be in retirement, including savings, expenses, and sources of income, including\u00a0Social Security<\/a>\u00a0benefits.\u201d<\/p>\n

There\u2019s lots of agreement on this.<\/p>\n

\u201cRetirement decisions should not hinge solely on the economic or market environment,\u201d Leo Chubinishvili, a certified financial planner at\u00a0Access Wealth<\/a>\u00a0in Roseland, N.J., told Yahoo Finance.<\/p>\n

\u201cThe primary factor in deciding to retire should be your financial readiness, including whether you have enough savings to support your desired lifestyle throughout retirement,\u201d he said. \u201cA well-structured retirement plan should be flexible enough to adapt to both high and low-interest rate environments, as well as varying market conditions.\u201d<\/p>\n

Lorna Sabbia,<\/a>\u00a0head of retirement and personal wealth solutions at Bank of America, added: \u201cComfort level with anticipated expenses versus accumulated balances is at the core of most people\u2019s timing when it comes to retirement.\u201d<\/p>\n