Thanksgiving is a time to reflect on gratitude and the year’s harvest — it’s also the perfect time to review your financial “harvest” and ensure your retirement savings are protected.
Over the past couple of years, retirees and pre-retirees have benefited from higher interest rates than we’ve seen in nearly two decades. Increased rates have created opportunities for savers to earn more while maintaining principal protection. However, the financial landscape is shifting again. With growing expectations that interest rates may decline over the next year, the window to take advantage of these elevated returns may be narrowing.
In simple terms: now is the time to make hay while the sun shines.
Why Higher Interest Rates Have Been Good for Retirees
Higher rates provide:
✔ Better earning potential on conservative investments
✔ Opportunities for guaranteed principal protection
✔ More flexibility in retirement income planning
Many savers have been able to earn solid returns without exposing their portfolios to the full volatility of the stock market.
But when interest rates drop, safe investment yields typically fall right along with them — often leaving retirees exposed to more risk if they continue chasing growth in the market.
Risks to Lower Rates for Retirement
When interest rates fall, the income you get from bonds, CDs and other fixed-income investments goes down. That means you might need to start withdrawing from your principal sooner than planned. Over time, this increases the risk of running out of money.
Another risk is inflation. If interest rates fall but inflation stays steady or rises, the real value of your savings decreases. So, while you’re getting less income, the cost of living could still be going up, reducing your purchasing power.
Then there’s reinvesting. When your bonds or CDs mature, reinvesting at lower rates means lower yields
Lower returns and a longer retirement mean an even higher risk of outliving your resources.
Perhaps one of the biggest problems of all is how people might react to these challenges. Falling interest rates might easily tempt people to take on greater risk by moving a larger portion of their savings into stocks. While that might help some, it can be dangerous if not carefully managed, especially in retirement when you don’t have as much time to recover from big losses.
Protecting Gains
That’s why now may be an ideal time to take some gains off the table and reposition a portion of your portfolio into vehicles designed to protect your principal while still offering growth potential.
At Bertram Financial, we often use principal protection solutions as an alternative to bonds. These solutions can:
- Provide competitive interest-earning potential
- Minimize downside exposure
- Help stabilize retirement portfolios during volatile periods
Still Working? You May Have More Options Than You Think
A common misconception: “I have a 401(k), so I can’t make changes.”
However, once you reach 59½, most employers allow in-service withdrawals — meaning you can move part of your 401(k) to a personal IRA without tax consequences. This opens up a much wider range of investment options, including principal-protected strategies.
It’s a smart way to reduce future market risk while continuing to save and build your retirement income plan.
Don’t Wait for a Market Downturn
Protecting what you’ve worked so hard to build isn’t just smart — it’s essential for a secure retirement. As we reflect on gratitude this season, consider giving yourself (and your family) the gift of financial confidence.
Now is the time to:
✔ Review your retirement accounts
✔ Take advantage of today’s higher rates
✔ Reduce unnecessary market risk
✔ Strengthen long-term income strategies
Take the Next Step Toward Your Dream Retirement
If you’re nearing retirement — or already retired — this is the ideal moment to discuss how you can lock in today’s opportunities before the next rate drop or a potential market downturn.
Bertram Financial can help you:
- Evaluate your current portfolio
- Identify gaps in retirement risk management
- Explore principal protection options tailored to your goals
📞 Schedule a conversation today: 608-987-1511
🌐 Explore free tools and resources: CreatingYourDreamRetirement.com
Protect your financial harvest — and enjoy a confident, comfortable retirement.