Does your retirement plan need interest rates to fall?
If you're five to ten years from retirement, it may be quietly counting on it. Want help working through your own numbers? Schedule a Retirement Resilience Call: https://jonathanpeters.net/consultation/
When market rates rise, prices of existing fixed-rate bonds generally fall, so the half of a portfolio that's supposed to hold steady can drop in the same year stocks do. The answer isn't guessing where rates go next. It's knowing which parts of your plan need the forecast to be right, while you still have a paycheck coming in.
Most retirement plans are built around the conditions everyone expects: markets rising over time, inflation settling, rates coming down. None of those assumptions get written down, and a plan that needs all of them at once only looks conservative on paper.
In this video, Jonathan Peters, who spent years on a trading desk watching consensus forecasts come apart, walks through why that matters now. A bridge engineer designs for the worst day, not a normal Tuesday, and that margin is written into the building code. Most retirement plans have no equivalent.
The mechanics come straight from the SEC's investor bulletin on interest rate risk: when rates rise, existing fixed-rate bonds generally lose value because newly issued bonds may offer higher yields. That's a price decline, not a default, but it's real.
2022 showed what that looks like. Morningstar Direct data reported by InvestmentNews put the median 2022 return for U.S. target-date mutual funds with a 2025 vintage at -15.4%. One low-equity fund in that group, holding about 20% in stocks, still finished down about 12.7%. That's history, not a prediction, and a median across funds rather than any one person's experience.
The fifteen-minute test, on one sheet of paper:
1. How much will my savings need to provide, after Social Security, a pension, and anything dependable?
2. If markets are down the year I stop working, where exactly do withdrawals come from?
3. If a rough stretch lasts longer than expected, what would I adjust, and what would trigger the change?
Circle any answer you can't explain yet.
Jonathan also explains Crisis Capital Engineering, Step 3 of his Life-Tested Retirement System: identifying money whose first job is to be available for planned withdrawals during a difficult stretch, and the trade-offs that come with holding money for access instead of growth.
Chapters:
0:00 Rates just did the opposite of the forecast
1:17 The assumption hiding under your plan
2:13 What a bridge engineer designs for
3:25 Why "safe" bonds fall when rates rise
4:10 2022: when stocks and bonds fell together
5:20 Three questions to test your plan
7:26 Selling on a plan, not under pressure
If you're within ten years of retirement and want a second set of eyes on what your plan needs to go right, book a time here: https://jonathanpeters.net/consultation/
Related: $500K? $1M? $2M? How Much Do You Really Need to Retire? https://www.youtube.com/watch?v=RKiGyETlnw4
===========================================================
Jonathan Peters is a Senior Financial Advisor with 40+ years helping people within 10 years of retirement build plans that survive reality, not just spreadsheets.
Free resource:
The 5-Day "Secure Retirement Formula" email crash course ➡️ https://jonathanpeters.net/5-day-crash-course
Connect:
LinkedIn: https://www.linkedin.com/in/jonathanpeters4/
Blog: https://jonathanpeters.net/blog/
Subscribe on YouTube: @JonathanPetersFinancialAdvisor
Krim Associates
45 Eisenhower Drive, Suite 550
Paramus, NJ 07652
201-632-2026
http://www.jonathanpeters.net
Disclaimer: "All investments and 1031 exchanges carry risks including loss of amount invested." Please consult with your tax/legal professional before making any investment decision. Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Krim Associates is not affiliated with Kestra IS or Kestra AS. https://www.kestrafinancial.com/disclosures
#RetirementPlanning #InterestRates #RetirementIncome
0
Retiring Before 65? Health Insurance Is on You