News that the Federal Reserve is poised to continue raising interest rates should be good news for retirees.
But financial experts say you may want to hold off on celebrating just yet.
That is because those rate hikes might not be enough to help create a source of reliable income that retirees really need.
“Rates are starting to tick up, but they’re ticking up at a very low level,” said Marta Norton, a portfolio manager at Morningstar Investment Management, at the firm’s investment conference in Chicago on Tuesday.
That puts the burden on individuals entering their golden years to figure out how to make their money last for 20 or even 30 years.
“The worst thing you can possibly do to affect your situation is to retire early,” said David Blanchett, head of retirement research at Morningstar.
But many people retire sooner than they expect, signing off from the workforce at age 62 or 63 instead of 65, for example, Blanchett said.
That comes as investment returns are projected to be less over the next decade.
“What we find is if 4 percent was that safe initial withdrawal rate historically, it’s 3 percent today,” Blanchett said.
While 3 percent is not the recommended withdrawal rate for everyone, Blanchett said, all retirees can stand to improve their financial picture by looking for strategic ways to make their money last.