Rising interest rates have massive implications for how you plan for retirement. In this video, I’ll help you understand the impact of interest rate hikes on 4 different types of assets. We’ll also look at the 5 longer-term implications for your financial plan. And at the end, I’ll give you 3 actions to help you see if you’re on track and a way to get your questions answered.

Steve Willems, CFP®, FEA, BA
Wealth Advisor, Willems Wealth Planning Group | Assante Financial Management Ltd.

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🎬 S E L E C T S C E N E S 🎬

0:00 – Intro about interest rates
1:23 – What about fixed income or bonds?
3:02 – What about stocks or shares?
6:42 – The 5 Longer Term retirement plan Implications
9:52 – 3 Action Steps

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RISING Interest Rates: What it means for your retirement plan?

Interest rates have been on the rise in recent years, and this trend can have a significant impact on your retirement plan. As interest rates increase, several aspects of retirement planning, including investment strategies, savings goals, and withdrawal strategies, may need to be reevaluated in order to maintain a comfortable retirement.

Investment strategies may need to be adjusted as rising interest rates can impact the performance of different asset classes. For example, bonds typically experience a decrease in value when interest rates rise, which can affect the overall performance of a retirement portfolio that includes fixed-income investments. On the other hand, rising interest rates can benefit certain types of investments, such as high-yield savings accounts and money market funds, which offer higher returns as interest rates increase. As a result, retirement investors may need to reconsider their asset allocation and investment choices to ensure the best possible returns in a rising interest rate environment.

Savings goals may also need to be revisited as higher interest rates can impact the amount of money needed to achieve retirement objectives. For individuals who are still working and contributing to their retirement savings, rising interest rates can result in higher returns on investments, allowing them to potentially reach their savings goals more quickly. However, for those who are in or near retirement, the impact of rising interest rates may be different. Individuals may need to reassess their retirement savings targets to account for potentially lower returns on certain investments and adjust their contributions accordingly to ensure they have enough money saved for retirement.

Withdrawal strategies for retirement income may need to be adjusted due to rising interest rates. With higher interest rates, some retirees may be able to rely more on income generated from their retirement portfolio rather than dipping into their principal. Additionally, some retirees may benefit from annuities, which can offer higher payouts in a rising interest rate environment. However, for those who rely on fixed income investments for retirement income, rising interest rates may result in lower monthly payments, necessitating a reevaluation of withdrawal strategies to ensure financial stability throughout retirement.

In conclusion, rising interest rates can have a significant impact on retirement planning, and it is essential for individuals to consider how this trend may affect their retirement plan. From investment strategies to savings goals and withdrawal strategies, it may be necessary to reassess various aspects of retirement planning to ensure financial security in a rising interest rate environment. Seeking advice from a financial advisor or retirement planner can be beneficial in navigating the potential impacts of rising interest rates on retirement planning and making informed decisions to secure a comfortable retirement.