Hoping to retire soon? According to investment representative Joshua Mellberg, low interest rates could act as a stumbling block. That’s because low interest rates incentivize corporations to borrow for higher potential earnings, while savers and retirees are penalized for investing in treasury bonds or CDs.
“They can’t generate much of a return on their savings, and they may not be in a position to risk their money in the markets where a higher yield is possible,” he says. “Savers and retirees have taken it on the chin. They have been penalized the hardest over the last several years because the Fed decided to artificially keep rates low.”
Interest rates are about to get a boost, but Mellberg says it won’t be a “miracle fix.” For people in this situation – or thinking about retiring soon – he offers three pieces of advice.
1. Don’t let things “just happen.” Take active control in how you manage your retirement investments.
2. Focus on finances, not age. Many people default to retiring at 65, but Mellberg says they should let finances dictate when the time is right. “With that approach, you are more likely to have the savings necessary to sustain you for the rest of your life,” he says.
3. Don’t go it alone. “Planning the right strategy for retirement is complicated, yet many people try to do it without seeking the assistance from a professional,” Mellberg says.