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The Fed’s stance on rate cuts remains uncertain, and in an environment where interest rates remain high for an extended period of time, investors are looking for strategies to effectively adjust their retirement portfolios.
Yahoo Finance’s Kerry Hannon breaks down the details and suggests ways investors can take advantage of higher interest rates.
For more expert insights and the latest market trends, click here to watch the full episode of Yahoo Finance Live.
Editor’s note: This article was written by angel smith
video transcript
[AUDIO LOGO]
Rachel Akuffo: This week, there was a lot of talk from the Fed pointing out that interest rates will remain capped for longer than investors expected. But with rate cuts due later this year, how will they affect those nearing retirement? Our own Kelly Hannon joins us on this. Nice to meet you, Kelly. So what should those preparing to readjust for retirement keep in mind?
Kelly Hannon: absolutely. Great question, Rachel. Here’s great news. This is actually super news for people nearing retirement in the sense that if you have the opportunity to lock in some of these higher interest rates like CDs, money market, Treasuries, etc., this is a real opportunity. Make sure you have a buffer, especially for the early years of retirement when you may need cash for living expenses. And I think we’ve all seen the stock portion of our retirement portfolio go up pretty well over the last year. So now is the best time to think twice and cut off some of that stock value and invest in something safer and more secure.
The Ministry of Finance is especially great. That’s because you can buy directly from Treasury Direct and there are usually no local or state taxes. It’s also a good opportunity. But they’re all over 5%, so take a look at these.
However, no one is saying that we should completely withdraw from stocks. Because if you have decades until retirement, you need the stock portion of your portfolio to continue to grow. So what this actually means is, as you said, rebalancing, rebalancing.
So I think it’s a great time and people really need to jump on this. Deciding to retire is entirely separate from actually having enough savings to support the lifestyle you want. But for people nearing retirement, this is a great opportunity to take part in some of these high-interest rates with low risk.
Rachel Akuffo: You can certainly lock some good stuff in there. And they’ll probably invest some of those stock profits into something a little less risky, at least for now. Thank you as always, Kelly Hannon. thanks so much.
Kelly Hannon: thank you.
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