Low Interest Rates, Market Volatility, and Your Retirement

Planning for retirement is never a “set it and forget it” activity. There are unexpected disasters, market drops, and changing laws that invariably cause retirees to reevaluate their plans of action. Recently, market volatility and the Federal Reserve’s decision to cut interest rates may have you wondering how to respond. Here’s what to consider when it comes to low interest rates, market volatility, and your retirement.

What is Your Risk Tolerance?

If the recent coronavirus correction caused you to panic, you might want to rethink your asset allocation or investing strategy. We can help you assess your risk tolerance and see if your portfolio needs adjustments. Remember that this likely won’t be the last period of market volatility you see throughout your retirement, and it can help to plan ahead of time. While “timing the market” is a popular investing theory, it doesn’t account for market drops caused by unpredictable events like the outbreak of a disease, natural disaster, or political instability.

How Do Low Interest Rates Affect You?

Low interest rates can be great for people buying a home or taking out student loans, but what about those nearing or in retirement? When lower-risk investments like CDs and bonds offer lower returns, it can make retirement planning more complicated. The Federal Reserve recently cut interest rates. While this may help an economy struggling with the coronavirus, it may tell a more complicated story for retirees.

 Where Will Your Retirement Income Come From?

It’s important to know where your money will come from once you or your spouse stop getting a paycheck. Start by figuring out how much you will get from Social Security. Social Security can offer lifetime guaranteed income, which is why having a plan for maximizing your benefit is so important. From there, you can figure out how to turn what you’ve saved into retirement income. You may want to include other lifetime income sources in your retirement income plan, and a financial advisor can explain your options. An advisor can also help you figure out how to draw on investment returns to create a comprehensive retirement income strategy.

If you’re looking to revise your retirement plan, we can help. Market volatility, low interest rates, and the overall uncertainty that comes with planning for retirement can cause panic. But there are ways for your financial plan to respond and prepare for future market drops. We offer complimentary financial reviews so we can meet to discuss your risk tolerance, retirement income plan, and unique financial planning needs.