Americans nearing retirement are in a very challenging environment. Interest rates are low, and there is a lot of market volatility and concern about rising interest rates. The long-term care and health care system is struggling, and people aren’t getting the help they need.
That’s according to nationally-recognized retirement expert Jamie Hopkins, who gave an interview to Washington, DC news radio station WTOP.
There are three major trends impacting retirement income planning today, says Hopkins. “First, low interest rates. This can’t be overstated when it comes to retirement income planning. What is probably most well-known about retirement income research is the 4% rule. The idea that you can take 4% of your account, adjusted for inflation each year, over the course of 30 years and not run out of money based on a historical investment of 50% in U.S. large-caps and 50% in U.S. bonds.”
However, with current interest rates where they are, this research might not hold up, says Hopkins. “The issue is safer investments, like U.S. bonds, certificates of deposit, the Treasury’s inflation-protected securities, annuities and life insurance products, which are all seeing lower payouts. Even other insurance products for retirement, like long-term care insurance, are seeing pressure due to low interest rates. All of this creates a real challenge for retirees looking to insurance products or safer investments for retirement security.” Read the full interview.