Low Rates Aren’t Going Anywhere. Here’s What That Means for Retirement Planning.

August 19, 2020 by David Blanchett

Low interest rates are bad for households with assets, but good for households with liabilities (loans). 

For example, I was able to recently refinance my mortgage. So, although the asset part of the balance sheet isn’t expected to do so well, I at least have a pretty sweet interest rate on my mortgage.

The balance sheets of retirees are dominated by assets, however. And while debt is on the rise among retirees, it’s the assets that fund retirement. 

For some perspective, the yield on 10-year government bonds is around 0.6% today, and inflation is expected to be around 1.4% for the next 10 years.

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Originally Posted at ThinkAdvisor on August 14, 2020 by David Blanchett.