Janeen is joined by Brian Decker, Owner, and Founder of Decker Retirement Planning to discuss how we can protect our retirement against rising interest rates. Rising interest rates cause bond prices to go down. If you think that interest rates, that are near record lows right now, will be trending higher from here then I hope you don’t own bond funds in your retirement portfolios.
The question many people come into Decker Retirement Planning asking is how do we protect ourselves from market crashes if we don’t own bond funds? Brian Tells us that this is tricky because traditionally, retirees have been told to own a 60/40 stock to a bond portfolio. Can you afford to have 40% of your portfolio in bond funds where they pay almost nothing and LOSE money when rates go higher? The answer is No, BUT, can you afford to be 100% invested in the stock market and risk losing 50% from here? The answer is also No. So, how do we reconcile those two “No’s”?
Retirees need to have safe money and most of Decker Retirement’s clients have about 25% risk exposure NOT 40%. Decker believes that is too much. However, there are some principal guaranteed accounts that do NOT have interest rate risk and have averaged a 6% return over the last several years. THAT is what they recommend for their clients; less risk and higher returns. Bond funds are one of the WORST investments out there right now. If you currently have an advisor who is telling you that your SAFE money should be in bond funds when interest rates are THIS low, they believe you should look for a different advisor because interest rate risk has never been higher for bond funds. Bond funds are NOT safe when rates are this low!
If you want to learn more, go to ABC4.com/retirenow to get your free Safer Retirement toolkit. The free toolkit includes 2 books and a sample income plan to help you learn more about what your retirement could look like.
Brian and the team at Decker Retirement Planning are here to help. Again, click here and get started today!