What changing interest rates mean for your retirement income
Higher rates are a gift for new retirees and a headache for borrowers. Here’s how to make them work for your plan.
Ardent Editorial Team
For a decade, retirees were told to accept near-zero yields on safe money. That has changed, and it opens up options that didn’t exist five years ago.
Safe income is back
With high-quality bonds and Treasuries paying around 4%, it’s possible to cover several years of spending with a “bond ladder” of investments that mature exactly when you need the cash.
Locking in versus staying flexible
Longer bonds lock in today’s rates but fall in value if rates rise further. Shorter bonds stay flexible but may reinvest at lower rates later. Most retirees benefit from a mix.
- Years 1–3 of spending: cash and short Treasuries
- Years 4–10: a ladder of high-quality bonds
- Beyond year 10: a diversified stock portfolio for growth
Don’t forget inflation
A 4% yield sounds good until inflation runs at 3%. Inflation-protected Treasuries (TIPS) and a healthy stock allocation protect your purchasing power over a 30-year retirement.
This article is general education, not personal advice. Talk to a qualified advisor about your situation.