Retirement investments strategies amid rate cut uncertainty

As the Federal Reserve's stance on rate cuts remains uncertain, and interest rates persist in a higher-for-longer environment, investors seek strategies to adjust their retirement portfolios effectively.

Yahoo Finance's Kerry Hannon breaks down the details, suggesting ways investors can take advantage of higher rates.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Angel Smith

Video Transcript

[AUDIO LOGO]

RACHELLE AKUFFO: We got a lot of Fed speak this week pointing to interest rates staying restrictive for longer than investors hoped. But with rate cuts expected later this year, how could those impact those near retirement? We have our very own Kerry Hannon with us on this. Good to see you, Kerry. So what should people keep in mind as they're getting ready to recalibrate into retirement?

KERRY HANNON: Absolutely. Great question, Rachelle. Here's the great news is this is actually super news for people who are near retirement in the sense that if the opportunity to lock in at some of these higher rates on things like CDs, and money markets, and treasuries, this is an opportunity to really give yourself that buffer for those early years in retirement in particular, where you might need that cash for your living expenses. And I think we've all seen a pretty sweet run up in the equity portion of our retirement portfolios in the last year. So this is a wonderful time to take a good look and just maybe lop off some of those equity appreciation there and put that over into some of these safer, more secure things.

Treasuries in particular are wonderful because you can buy those directly at Treasury direct and they are free from, in general, local and state taxes. So that's another good opportunity. But they're all bumping over 5% so take a look at these.

But no one is saying to get out of equities altogether. Because, my goodness, if you've got a couple of decades ahead of you in retirement, you need that equity portion of your portfolio to continue to grow. So what this is really about, it's about rebalancing, like you said, recalibrating.

So I think it's just a great time and people really need to jump on this. The decision to retire is a whole different ball of wax about whether you actually have enough saved to support the lifestyle you want. But for near retirees, this is a super opportunity to get in at some of these high rates with low risk.

RACHELLE AKUFFO: Can certainly lock in some goodies there. And perhaps take a little some of those equity profits, put it into something a little less risky at least at this point. Appreciate you as always, Kerry Hannon. Thanks so much.

KERRY HANNON: Thank you.