Interest Rates Have Shifted. Here’s How to Protect Your Future.
Originally published: September 26, 2022
Updated: August 19, 2026
The Federal Reserve spent much of 2022 and 2023 aggressively raising the benchmark federal-funds rate to combat historic inflation, ultimately pushing it to a peak of 5.25%–5.50% by mid-2023 (source: Forbes Advisor: Federal Funds Rate History). Since then, the Fed has begun easing that stance, and as of August 2026 the federal-funds rate sits at roughly 3.50%–3.75% (source: Federal Reserve H.15 Selected Interest Rates; Forbes Advisor: Federal Funds Rate History).
For retirees, a shifting rate environment — whether rates are rising or falling — can be unsettling, especially for those living on fixed incomes. Lower rates can mean reduced yields on savings accounts, CDs, and other fixed-income holdings, while market volatility continues to pressure 401(k) and IRA balances. At the same time, inflation from recent years has made everyday expenses such as groceries and gas costlier, even as rate relief begins to take hold.
Changes in the federal-funds rate can also affect Americans in other ways, including the pace of economic growth and the unemployment rate.
Watch Your Spending
“The first thing to watch out for is spending,” said Kelly LaVigne, Vice President, Head of Annuity Advanced Markets at Allianz Life. “Companies have tried to catch up by producing a lot of inventory and a slowing economy might make them competitive to sell their products with tempting prices,” he said – “those sales may be alluring, but retirees and retirement savers alike should be protective and curb any bad spending habits.”
During periods of economic uncertainty and shifting interest rates, retirees should be saving all they can, even though their own savings may also be under pressure from market swings.
Americans may also want to use this time, if they can, to tackle any credit card debt, since carrying high-interest debt remains costly no matter which direction rates move. Spending only cash when making essential purchases is one way to prevent credit card debt from getting further out of hand during uncertain times.
Diversify Your Portfolio
Stock market volatility can be hard to stomach, especially for someone whose nest egg is tied up in at-risk investments, but retirees and near-retirees are often told to stay the course. We don’t want to have a knee jerk reaction, but in reality, we need to protect ourselves and our future. That includes developing and restructuring a retirement plan when it makes sense to do so. This usually includes balancing risk tolerance as we age and our time horizon lessens.
The “Rule of 100” is one good way to determine a healthy amount of risk in your portfolio: Subtract your age from 100 to determine the percentage of your portfolio that can be left in riskier areas, such as stocks and equities. For example, if you are 60 years old, it is a good rule of thumb to not have more than 40% of your investments at risk. The other 60% should be placed in a safe environment.
Take a Look at Your Retirement Income Streams
Now is the time for anyone in or near retirement to consider multiple streams of income if they haven’t already. For some Americans, that may simply be a retirement portfolio and Social Security benefits. For others, it could be a pension, or an annuity, alongside personal retirement savings.
Fixed index annuities (FIAs) are a favorable option, as many can be structured — when an optional income rider is elected — to provide guaranteed income for life, backed by the claims-paying ability of the issuing insurance carrier. An FIA is what we at Summerlin Benefits Consulting like to call a “safe money vehicle”, as it allows you to accumulate interest growth potential in an asset (some portion of your overall retirement strategies) for the purpose of turning on income in the future, without risking it to build that potential. It allows you to create your own future fund, with a defined monthly income benefit which can supplement social security and other retirement income sources.
While many retirees have re-entered the labor market as a way to bring in extra cash and preserve their investments, income planning can sometimes help prevent this “un-retirement” from occurring.
Seek Help from a Financial Professional
Retirees should take stock of how they’re feeling right now given today’s shifting rate environment, and keep that in mind as the Federal Reserve continues to adjust rates in the months ahead. Look at where you are right now, remember what this feels like, and try to plan ahead. If you are not sure where to start, a financial professional can help you evaluate your goals to make sure you are on the right path. Retirees and other more mature investors, however, may want to utilize a professional who specializes in “Safe Money” strategies, so that they can ensure the guidance they get relates to their current circumstances and needs.
At Summerlin Benefits Consulting we are Safe Money specialists. We believe that helping clients protect the money they already have will go a long way to helping them protect their futures as well. If you’d like help reviewing your options for retirement income protection and/or to discuss how to best plan your financial future, please feel free to call today for a no-obligation meeting.
Important Tax and Legal Information
Note: This content is for informational purposes only and does not constitute tax or legal advice. Summerlin Benefits Consulting does not provide social security, specific advice related to taxes, or legal advice. Consult a tax/legal professional for guidance with your individual situation.
Important Retirement Planning Information
Every retirement strategy is unique, and not all annuity products offer the same features, guarantees, or level of protection. References in this article apply only to the specific retirement solutions discussed and should not be interpreted as applying to all annuities. The right strategy depends on your individual goals, financial situation, and retirement objectives. This is something Summerlin Benefits Consulting can help you determine.
Frequently Asked Questions
Q: How do changes in the federal funds rate affect people who are already retired?
A: Federal Reserve changes to the federal funds rate affect retirees in different ways depending on the direction. When rates rise, borrowing costs increase and economic growth can slow; when rates fall, the yields on savings accounts, CDs, and other fixed-income holdings tend to drop. Either way, retirees on fixed incomes can feel the effects quickly, especially when combined with everyday costs like groceries and gas that continue to fluctuate.
Q: What can retirees do to help protect their finances when interest rates change?
A: Watch spending closely and avoid tempting sale prices companies use to move inventory during a slowdown. Paying down high-interest credit card debt and diversifying a portfolio according to age and risk tolerance also help. Reviewing all retirement income streams rounds out a solid protective approach.
Q: What is the “Rule of 100” for gauging retirement portfolio risk?
A: The Rule of 100 is a quick way to estimate how much portfolio risk may be appropriate: subtract your age from 100 to get the percentage that could reasonably stay in riskier assets like stocks. A 60-year-old, for example, would keep roughly 40% at risk and the rest in safer holdings.
Q: Can a Fixed Index Annuity (FIA) provide guaranteed income for life?
A: A Fixed Index Annuity (FIA) can be structured to provide guaranteed income for life when an optional income rider is elected, offering a defined monthly income benefit that can supplement Social Security and other retirement income sources — all without exposing that portion of your savings to stock market risk. As with any insurance guarantee, this benefit is backed by the claims-paying ability of the issuing insurance carrier.
Q: Why should retirees consider more than one source of retirement income?
A: Relying on a single income source, such as Social Security alone, leaves retirees more exposed to inflation and market swings. Combining sources — a portfolio, Social Security, a pension, and/or a Fixed Index Annuity — can create more diversified, stable income throughout retirement. it or hit the Manage Text button to change the font, color, size, format, and more. To set up site-wide paragraph and title styles, go to Site Theme.
