How Changing Interest Rates Could Affect Your Money in Retirement
Interest rates have been moving in 2025, and for investors and retirees, even small changes can have a big impact. Rates affect more than just mortgages, they ripple through your savings, investments, and retirement income plan. Understanding how they work can help you make smarter financial choices.
Why Interest Rates Matter
Think of interest rates as the “price of money.” When they go up, borrowing gets more expensive but savers and retirees may actually benefit. When they go down, loans are cheaper but conservative income options such as bonds don’t pay as well.
The Upside of Higher Rates
- Better returns on money: Savings accounts, CDs, and money market funds are finally paying more than pocket change.
- More income choices: Some retirement income options offer stronger payouts when rates are higher.
- Options for conservative investors: You don’t have to take as much risk to earn a steady return.
The Downsides of Higher Rates
- Borrowing costs more: Mortgages, credit cards, and home equity loans can all get pricier.
- Existing bonds may lose value: If you already own bonds, their resale value drops when new ones pay more.
- Stock market shake-ups: Companies that rely on cheap borrowing (like many tech firms) may struggle when rates rise.
What This Means for Retirees
If you’re retired—or getting close—rate changes can feel like shifting sand. You want your income to be steady no matter what’s happening in the economy. That might mean:
- Adjusting how and when you withdraw money.
- Periodically reviewing your financial plan and income sources.
- Spreading savings across different account types so you’re not locked into one source of income.
What You Can Do
This is a great time to step back and ask:
- Am I taking advantage of today’s rates?
- Do I have debt that’s getting more expensive?
- Is my retirement income plan built to handle both rising and falling rates?
You don’t need to follow every headline about the Federal Reserve. But you do need to know how interest rates affect your money, especially in retirement. A little planning now can help turn rate changes into opportunities instead of surprises.
If you’d like a clear look at how today’s rates could impact your retirement income, let’s talk. We’re here to help you feel confident your money will work for you—no matter where rates go next.
Julia Carlson is a registered representative with LPL Financial. Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC.
Information in this material is for general information only and not intended as investment, tax, or legal advice. Please consult the appropriate professionals for specific information regarding your individual situation prior to making any financial decision.
