Compared to other Americans, affluent Baby Boomers have positioned themselves to take full advantage of rising interest rates, whether they realize it or not.
Los Angeles, CA (PRWEB) August 13, 2013
Interest rates strongly tie into how Americans view their prospective financial success. In fact, 65 percent of retirement-age individuals are concerned that consistently low interest rates could hurt their retirement finances, according to data from the National Retirement Risk Index. Although Baby Boomers continue to worry about the overall low climate of interest rates compared to pre-recession periods, a new GoBankingRates.com report reveals that a recent increase in rates has given near retirement-aged investors many reasons to look forward to interest rate surges.
“Compared to other Americans, affluent Baby Boomers have positioned themselves to take full advantage of rising interest rates, whether they realize it or not,” says GoBankingRates.com editor, Jennifer Calonia. “We found that the majority [of Baby Boomers] are taking a pessimistic attitude towards climbing rates, but in fact, the current financial environment is helping many Boomers thrive.”
The report found five ways that Baby Boomer’s portfolios are strengthening as interest rates continue to recover from record lows.
Two of the most compelling five reasons are below:
1. Takes less money to grow income
An increase in interest rates overall means that depositors and investors require less capital to earn more income. “Now, 10-year Treasury notes are paying 60% more than they were just six weeks ago meaning that $100,000 of Treasuries that were paying about $1,650 are now paying roughly $2,600,” said Barry Glassman, founder of Glassman Wealth Services on Forbes in June.
As of August 12, 2013, 10-year Treasury notes were paying 2.61%, up from 1.86% on January 1 of this year, a 40% increase.
2. Price of goods still not inflated
While interest rates are increasing on products like mortgage loans, GoBankingRates.com finds that inflation is still relatively unmoved, meaning that the price of consumer goods hasn’t taken an upward swing like interest rates.
“Younger Boomers who have a nest egg have a lot to look forward to leading up to their retirement years, especially with the financial market slowly, yet surely, recovering,” Ms. Calonia says.
Additional findings in the GoBankingRates.com report identify lower personal debt and investment choices as other contributors to Baby Boomers thriving in a rising interest rate environment.
To view the complete report, please visit GoBankingRates at http://bit.ly/11ZIygS.
GoBankingRates.com is a personal finance website that connects consumers with the best interest rates nationwide. They collect rates on savings, CDs, and checking accounts, as well as auto and mortgage loans from over 4,000 financial institutions. GoBankingRates.com’s editors have been featured on several top media outlets such as US News, Yahoo! Finance, Forbes, The Street, LA Times, Huffington Post and more.
Center for Retirement Research at Boston College, The Impact of Interest Rates on the National Retirement Risk Index, June 2013.
Forbes, 5 Reasons Retirees Should Be Psyched About Rising Interest Rates, June 2013.