{"id":16172,"date":"2023-11-14T11:10:55","date_gmt":"2023-11-14T17:10:55","guid":{"rendered":"https:\/\/johnsonwim.com\/?p=16172"},"modified":"2023-11-14T11:10:55","modified_gmt":"2023-11-14T17:10:55","slug":"how-fed-rates-can-affect-your-retirement","status":"publish","type":"post","link":"https:\/\/johnsonwim.com\/how-fed-rates-can-affect-your-retirement","title":{"rendered":"How FED Rates Can Affect Your Retirement"},"content":{"rendered":"

When it comes to the Federal Reserve, its policies wield substantial influence over consumer prices and interest rates. The choices they make today directly and profoundly impact our market, economy, and even our retirement tomorrow.\u00a0<\/b><\/p>\n

Retiring wealthy is a financial goal for many Iowans. This endeavor entails disciplined savings, smart investments, and well-informed choices aimed at helping secure your financial future. Yet, many factors can significantly influence your retirement plans. One underestimated aspect is the role of the FED.<\/span><\/p>\n

In this blog, we will explore the nature of the FED, how its rates can affect your retirement, and how a Fiduciary can help you navigate these intricate financial waters. Here\u2019s what you need to know.<\/span><\/p>\n

Understanding the Federal Reserve (FED)<\/b><\/h3>\n

The Federal Reserve, often called the FED, is like the financial captain of the United States. It was created in 1913 by the Federal Reserve Act and consists of twelve regional banks comprising government and private entities. The FED has three main jobs: managing the country\u2019s money policies, keeping an eye on big banks, and helping to ensure the financial system doesn\u2019t go haywire.<\/span><\/p>\n

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In the past, the FED had two main goals. First, it wanted to keep prices steady, which usually meant aiming for a <\/span>2% price increase each year.<\/span><\/a> Second, it wanted to make sure as many people as possible had jobs, which meant keeping unemployment low, typically around 4-5%.<\/span><\/p>\n

The FED can buy or sell U.S. Treasury bonds in the open market. When the FED buys bonds, it pumps more money into the financial system, making borrowing more affordable. They can also lend money to banks to increase the amount of money in circulation. These strategies can help benefit retirees preserve the value of their assets, potentially reducing the risk of market downturns that could erode their wealth.\u00a0<\/span><\/p>\n

Now that we know how the FED works let\u2019s dive into how it can affect your purchasing power.<\/span><\/p>\n

How FED Rates Affect Your Purchasing Power<\/b><\/h3>\n

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You\u2019ve probably heard the saying, \u201cYou can\u2019t fight the FED,\u201d but what does it mean? It means the Federal Reserve (FED) greatly impacts our money and what we can buy. The Federal Reserve\u2019s decisions regarding interest rates extend beyond borrowing and saving costs; they hold sway over the broader economy.<\/span><\/p>\n

These decisions ripple through various aspects of our financial lives, ultimately impacting our purchasing power as consumers. <\/span>Currently, the interest rate sits at 3.70%<\/span><\/a>. When interest rates change, they can influence the rates on loans, savings, and even the performance of investments.\u00a0<\/span><\/p>\n

These shifts can significantly affect how much we can spend and save. By managing inflation and supporting overall economic stability, the FED indirectly helps to enhance the purchasing power of retirees, helping to allow them to maintain their desired standard of living and make meaningful financial choices throughout their retirement years.<\/span><\/p>\n

So, the Fed\u2019s interest rate decisions are not just numbers on a screen; they are fundamental drivers of our ability to make financial choices and maintain our desired standard of living.<\/span><\/p>\n

How FED Rates Affect Your Retirement<\/strong><\/h3>\n

You might wonder why the Federal Reserve (FED) matters regarding your retirement plans. Well, the FED\u2019s actions have a significant impact on the economy, which, in turn, affects your retirement savings and plans in several ways:<\/span><\/p>\n