Fed is Raising Interest Rates. How do Retirees Benefit?
Some sectors of the population may feel the pain of interest rate hikes, while current retirees, and those near retirement, could actually benefit.
Potential homebuyers frowned at the Fed’s mid-March quarter-point rate hike because they can expect mortgage rates to continue to climb steadily, as they have since January. Freddie Mac’s weekly research bulletin shows that between Jan. 20 and March 24, rates for 30-year mortgages increased more than 1.1 percentage points. A review by the Mortgage Bankers Association revealed that the higher rates are starting to dampen home-buying, with purchases declining by 6% week over week. We have to wait to see whether slowing sales affect how the Fed adjusts its rates.
On the other hand, many retirees are smiling as interest rates creep up. That’s because if a portion of your income is coming from fixed income investments, you can see those yields rise. And one group of retirees could be particularly happy: those who are planning to include annuity payments as one of their sources of income.More