<body><div><img src="https://img.particlenews.com/image.php?type=thumbnail_580x000&amp;url=1h4KOQ_0vfUVbX300" style="display:none" alt="https://img.particlenews.com/image.php?url=1h4KOQ_0vfUVbX300" width="1200" height="675" > The Federal Reserve’s surprising <a href="https://www.reuters.com/markets/rates-bonds/fed-sees-higher-terminal-rate-reached-sooner-mcgeever-2024-09-19/" rel="nofollow"> 0.5% cut to the federal funds rate </a> will have trickle-down effects on consumer lending and the stock, labor, and housing markets. While lower interest rates aim to increase consumer confidence, spending, and business growth, some financial products may also be impacted. However, conservative low-risk investments preferred by retirees, such as Certificates of Deposit (CDs) and annuities, may see lower returns. <a href="https://www.thestreet.com/retirement/retirement-average-american-faces-new-medicare-changes-2025" rel="nofollow"> Related: Medicare changes will impact your wallet in 2025 </a> We spoke with <a href="https://www.thestreet.com/author/robert-powell" rel="nofollow"> Bob Powell </a> , CFP and editor of <a href="https://www.thestreet.com/retirement-daily/" rel="nofollow"> Retirement Daily </a> , to unpack what retirees can expect from this rate cut and future rate cuts through 2025. Lower rates may prompt some retirees to reexamine their investment portfolios. <nbtemplate data-id="AdPlaceholder" data-content="JTdCJTdE"></nbtemplate><h2> Retirees should focus on investments with returns above inflation rates </h2> Retirees tend to have risk-averse investment portfolios, as most have passed the “accumulation” phase of their lives and are more focused on maintaining their savings and offsetting inflation risk. Powell suggests that retirees focus on money market funds and CDs to accrue interest in a less risky way. More on retirement: <ul><li><a href="https://www.thestreet.com/retirement/the-average-american-faces-one-major-retirement-dilemma" rel="nofollow"> The average American faces one major 401(k) retirement dilemma </a></li><li><a href="https://www.thestreet.com/real-estate/dave-ramsey-mortgage-early-retirement" rel="nofollow"> How your mortgage is key to early retirement </a></li><li><a href="https://www.thestreet.com/retirement/dave-ramsey-reveals-todays-simple-secret-to-a-dream-retirement" rel="nofollow"> A few simple tasks can help you thrive in retirement </a></li></ul> “I think one thing that retirees might consider doing is investing in a way that allows them to take advantage of the existing higher interest rates that may be around,” he said. “So you could invest maybe in a money market fund and earn 4%, which is above the inflation rate.” <nbtemplate data-id="AdPlaceholder" data-content="JTdCJTdE"></nbtemplate> “In fact, it's one percentage point above inflation at the moment,” he explained. “So that puts more money in your pocket any time you can earn a nominal rate of return that's higher than the current inflation rate, you get a real rate of return that's positive.” <figure><img src="https://img.particlenews.com/image.php?type=thumbnail_580x000&amp;url=3uc1UT_0vfUVbX300" alt="https://img.particlenews.com/image.php?url=3uc1UT_0vfUVbX300" width="1200" height="675" ><figcaption>A retired couple is seen discussing finances. ShutterStock </figcaption></figure><h2> CD ladders can help offset inflation </h2> A <a href="https://www.bankrate.com/banking/cds/cd-ladder-guide/#:~:text=A%20CD%20ladder%20consists%20of,CD%20when%20each%20CD%20matures" rel="nofollow"> CD ladder </a> allows retirees to open multiple products with different maturity dates, giving access to different portions of their money. <nbtemplate data-id="AdPlaceholder" data-content="JTdCJTdE"></nbtemplate> “Think about investing in those instruments like money market funds or consider laddering CDs,” Powell said. <a href="https://www.thestreet.com/retirement/heres-how-average-americans-retirement-and-401-k-plans-succeed" rel="nofollow"> Related: How average Americans can better plan for 401(k), retirement income </a> “At the moment, you might be able to ladder 1 to 5-year CDs that offer higher rates than what inflation is at the moment, and then that can also put real money back in your pockets, too,” he explained. Retirees can reap the benefits of getting higher interest rates in the short term while having investments secured that can withstand inflation and market volatility. CD ladders typically allow retirees to earn more across multiple products than if they were to put all of their savings in one long-term CD. “Those two things should go a long way toward helping retirees invest in a way that — ultimately one of the goals of investing in retirement, or even in your pre-retirement years — is to outpace inflation.” <nbtemplate data-id="AdPlaceholder" data-content="JTdCJTdE"></nbtemplate><a href="https://www.thestreet.com/investing/stocks/veteran-fund-manager-stocks-pain" rel="nofollow"> Related: Veteran fund manager sees world of pain coming for stocks </a></div></body>

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If you're retired, here's a way to react with your money.