"Retirees are often advised to limit risk in their portfolios, as well as keep cash reserves on hand to cover anywhere from one to three years of living expenses. The logic is that if the stock market tanks and it takes a long time for it to recover, it's important to have cash reserves to wait out that sort of downturn. Now that the Fed has cut interest rates again, the yields on savings accounts may follow suit."
"It's a big myth that retirees don't borrow money the way younger consumers do. In 2025, baby boomers have an average credit card balance of $6,795, according to Experian. That's comparable to the average $6,961 balance held by millennials. With interest rates falling, consumer debt should become less expensive. That's good news for Social Security beneficiaries who are carrying credit card balances. (Falling rates won't directly affect fixed-rate loans, though they could open the door to refinancing.) Also, many older Americans have a lot of equity in their homes."
On Dec. 10 the Federal Reserve cut its federal funds rate by a quarter point, marking a third rate cut this year. Retirees who rely on low-risk investments and cash reserves should expect yields on savings accounts and CDs to decline, affecting income from CD ladders. Those considering renewing CDs may want to act sooner to lock higher yields. Falling interest rates can reduce costs for consumer debt, benefiting Social Security recipients with credit card balances, while fixed-rate loans remain unaffected though refinancing may become attractive. Many older Americans could find it easier to tap home equity. Lower rates won’t directly affect Social Security COLAs.
Read at 24/7 Wall St.
Unable to calculate read time
Collection
[
|
...
]