What interest rate cuts could mean for retirees

The Federal Reserve is widely expected to slash rates of interest in a move that can well have ripple effects across the total economy. Bob Powell, Editor, Retirement Every day, joined TheStreet to speak about what lower rates of interest could mean for retirees.

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Full Video Transcript Lower than:

CONWAY GITTENS: And so now that inflation is relatively under keep watch over and the federal reserve goes to be in a rate cutting mode, what does that mean for retirees?

BOB POWELL: Yeah, so I suspect for retirees, one thing that they could trust doing is to place money right into a style that enables them to make the kind of just a few the present higher rates of interest so to likely be around. In order that which you can have the capacity to invest perchance in a money market fund and earn Four% which is above inflation. In point of fact, that's that's one percentage point above inflation at the present. In order that that puts additional profit your pocket any time you are able to earn a nominal rate of return that's higher than the present inflation rate, you get an actual rate of return that's positive.

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So listen on investing in those instruments like money market funds or trust laddering CDs. In the interim, you are able to have the flexibleness to ladder 1 to 5 year CDs that provide higher rates than what inflation is at the present, and then which put real money back in your pockets, too. And I suspect those two those two things would go a ways toward helping retirees put money right into a style that sooner or later one of many many goals of of investing in retirement or during even in your pre-retirement years, is to outpace inflation. And we have a possibility to try this.