Revisit Your Retirement Strategy
Bloomberg Businessweek|January 24, 2022
High valuations, rising interest rates, and spiking inflation make it time for a checkup
Revisit Your Retirement Strategy

After years of watching strong markets swell portfolios, many recent and would-be retirees are in a nice spot—on paper. But it may be an awkward and anxious moment emotionally. The assets that sent account balances to such heights— particularly a handful of big U.S. technology stocks—now look expensive by many measures and have been showing some weakness this year. At the same time, reducing your exposure to stocks feels dangerous with inflation running at the highest rate in decades, eating away the modest returns of more conservative investments. And with the rise in interest rates seen by many as just getting started, bond funds look vulnerable to losses.

“There is definitely a lot more strain now for retirees,” says Wade Pfau, a professor at the American College of Financial Services in King of Prussia, Pa., which trains financial planners and advisers. “We are outside of all the historical situations that we have been talking about for retirement.”

After months of predictions that inflation would be transitory, the Federal Reserve’s recent sharp pivot to being concerned about it may be the start of an unmooring of interest rates from historically low levels. While annual yields on 10-year U.S. Treasury bonds are hovering near a two-year high at about 1.86%, that’s far from the 6% average back in the early 1960s. Bond prices fall as rates rise, so even the safest fixed-income investment may be in for a relatively rocky ride. Higher interest rates will also mean higher yields from bond funds—and they’ll eventually show up as higher rates in certificates of deposit and money-market funds as well. But the hit to bond funds is immediate.

この記事は Bloomberg Businessweek の January 24, 2022 版に掲載されています。

7 日間の Magzter GOLD 無料トライアルを開始して、何千もの厳選されたプレミアム ストーリー、9,000 以上の雑誌や新聞にアクセスしてください。

この記事は Bloomberg Businessweek の January 24, 2022 版に掲載されています。

7 日間の Magzter GOLD 無料トライアルを開始して、何千もの厳選されたプレミアム ストーリー、9,000 以上の雑誌や新聞にアクセスしてください。

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