Retirement

Yet Another Interest Rate Hike — What Does It Mean for You?

By Chris Duderstadt

September 22, 2022

Yet Another Interest Rate Hike — What Does It Mean for You?


Key Points – Yet Another Interest Rate Hike — What Does It Mean for You?

  • FOMC Chairman Jerome Powell Announces Fifth Interest Rate Hike of 2022
  • A Third Consecutive Interest Rate Hike of 75 Basis Points
  • Which Is Affecting You More: The Sky-High Inflation or the Ongoing Interest Rate Hikes?
  • Bud Kasper’s Main Takeaway: Stay Calm and Balance Your Risk
  • 3 Minutes to Read

Interest Rates Remain on the Rise

On Wednesday afternoon, Federal Open Market Committee Chairman Jerome Powell announced a third straight interest rate hike of 75 basis points. It marked the fifth interest rate hike of 2022, which raised the Fed funds rate to a range of 3% and 3.25%.

We’re now three months removed from the first of the three 75 basis point increases, which was the biggest interest rate hike in nearly three decades. Following that initial 75 basis point increase, Dean Barber and Bud Kasper assessed the impact that rising interest rates can have on your retirement on America’s Wealth Management Show. The bottom line is that it effects everyone differently.

Walking the Tight Rope: Raising Interest Rates to Fight Inflation

While this inflationary and rising interest rate environment that we’ve been mired in this year isn’t something that we’re completely new to, it’s still makes people feel uncomfortable—and for different reasons. Dean and Bud have been explaining throughout 2022 that Powell is in a tough position. For the first half of this year, he was trying achieve a soft landing. What exactly does that mean, you ask? Achieving a soft landing means slowing inflation by raising interest rates without leading the economy into a recession. Well, we technically entered a recession in July after back to back negative quarters in GDP.

While a soft landing wasn’t in the cards, the goal of slowing inflation still looms large. Inflation is impacting most Americans far more than these interest rate hikes, and Powell has been adamant about that. So, you can expect more interest rate hikes to come. Many policy makers anticipate that the Fed funds rate will be between 4% and 4.5% by year’s end.

“The FOMC is strongly resolved to bring inflation down to 2%, and we will keep at it until the job is done,” Powell said in the latest FOMC meeting.

Moving Forward with Patience and a Financial Plan

Whether you’re more affected by inflation or the interest rate hikes, one thing is certain in these otherwise uncertain times—it’s pivotal to move forward with a comprehensive financial plan. Earlier in September, Dean and Bud reviewed eight ways to combat financial uncertainty, and creating a comprehensive financial plan was No. 1 on the list.

A comprehensive financial plan has many moving parts, but it gives you the answer a question that is on the mind of so many hopeful retirees—how much do I need to retire? The main purpose of a comprehensive financial plan is to help you accomplish your retirement goals with taking on the least amount of possible risk. That’s what our Guided Retirement System is all about.

Following Powell’s announcement of Wednesday’s interest rate hike, Bud was interviewed by KMBC 9 News about how to navigate these risks of inflation and rising interest rates, and the importance of staying patient in the process.

“The thing to do, though, is to stay calm, make sure you balance the risk,” Bud said.

Do You Have Questions About the Latest Interest Rate Hike?

We understand that being patient right now can be easier said than done. That’s one of many reasons why we’re making our financial planning tool accessible to everyone so they can start building their plan ASAP. You can use the same tool that our CFP® Professionals use with our clients by clicking the “Start Planning” button below.

START PLANNING

Through our financial planning tool, you can stress test your financial plan through various economic conditions. Recently, we’ve looked at other significant market downturns—such as the Great Recession and the Dot-Com Bubble—and stress tested people’s plans to show them their probability of success during those times. The goal is to build a plan that gives you clarity and confidence to get you to and through retirement.

It is important to understand that our financial planning tool is intended for professional use. If you have questions that arise while using it or just about the effect this latest interest rate hike could have on you, you can schedule a 20-minute “ask anything” session or complimentary consultation with one of our CFP® Professionals by clicking here. They can screen share with you while using our tool to help get you started with your financial plan. We’re always happy to answer any questions to ensure that you’re living your one best financial life in retirement.


Investment advisory services offered through Barber Financial Group, Inc., an SEC Registered Investment Adviser.

The views expressed represent the opinion of Barber Financial Group an SEC Registered Investment Advisor. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Barber Financial Group does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.