3 Risks Higher Interest Rates Pose to Your Retirement Plan [Video]

Key Takeaways

• Higher yields are a positive when it comes to retirement planning. They lift the return prospects for bonds, which means that you don’t need to take as much risk in order to earn a decent safe return. We also see positives for insurance-type products like annuities.
• We’re talking about potentially interest rates declining in the second half of 2024. If you are a cash investor and you’ve hunkered down in cash, you love those 5% yields that you’re getting, that could prove fleeting.
• You want to be careful about overallocating to cash, certainly because of inflation, but anything with a fixed rate attached to it that’s paying you a fixed rate of interest.
• Now that we’re in a higher rate environment, that means bigger tax bills. It bears paying attention to asset location, what types of assets you’re holding where.

Susan Dziubinski: Hi, I’m Susan Dziubinski with Morningstar. Higher interest rates …