Interest rates have gone up again. Many are wondering how to protect their future.

For the third time in a row, the Federal Reserve said on Wednesday, September 21st  it would raise the benchmark federal-funds rate – this time, by a 0.75 percentage point so that it hovers between 3% to 3.25%. Officials suggested this would not be the last time this year, and to expect the rate to jump to around 4.4% by the end of 2022.

The news may seem especially unsettling for retirees, as many are living on fixed incomes. Increasing the federal-funds rate is the Federal Reserve’s attempt to combat inflation, but many Americans are trying to do that themselves – while also handling the stresses of market volatility. In recent years the economic environment has felt unnerving at times for retirees, as well as retirement savers: market volatility has pushed 401(k) and IRA balances down, which has depleted many retirees’ “nest eggs”. Additionally, rising inflation has made everyday expenses such as groceries and gas much costlier.

The Federal Reserve said higher interest rates will also affect Americans in other ways, including a slowing economy and a rise in the unemployment rate.

Watch Your Spending

“The first thing to watch out for is spending”, said Kelly LaVigne, Vice President of Advanced Markets and solutions 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.”

When there is a downward trend in U.S. stock indexes, especially after the Federal Reserve’s latest announcement of increases, retirees should be saving all they can, but it’s hard because retirees savings is also at risk.


Americans may also want to take this time, if they can, to try to tackle any credit card debt as the rate hike will affect higher-interest debts.  Spending only cash when making essential purchases is a way to prevent credit card debt from getting even further out of hand during turbulent 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 an ideal option, as they can provide a guaranteed income for life. An FIA is what we at Summerlin Benefits Consulting like to call a “safe money vehicle”, as it allows you to grow an asset (some portion of your overall retirement strategies) for the purpose of turning on income in the future, without risking it to grow it.  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 with the latest rate hike and keep it in mind if the Federal Reserve increases the rate again later this year. 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 advice they get relates to their current circumstances and needs.
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At Summerlin Benefits Consulting we are Safe Money Experts. 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.