What the Fed’s Summer Pause Means for Your Retirement Plan
Vice President, Wealth Management Advisor
The Federal Reserve held interest rates steady at its June meeting – again. After a series of aggressive rate hikes the past two years, the central bank is signaling that it’s comfortable keeping rates “higher for longer” while continuing to monitor inflation.
But what does that mean for your retirement plan, especially if you’re a business owner nearing retirement or a professional in your peak earning years?
At WealthSouth, we help clients translate economic policy into personal strategy. Here are four ways the Fed’s current stance might impact your retirement planning, and what you can do about it.
1. High Interest Rates May Stick Around Longer Than You Think
The Fed is in wait-and-see mode. Even if inflation data cools, cuts may not arrive until late 2025 or later.
For pre-retirees:
Fixed-income yields remain attractive, but don’t get caught chasing short-term gains.
If you’re planning to shift toward bonds or CDs, be strategic about laddering maturities to avoid reinvestment risk.
For business owners:
Higher borrowing costs may continue to pressure margins.
Review business debt structures and consider locking in longer-term financing before rates eventually decline.
2. Opportunity for Strategic Roth Conversions
Higher interest rates often mean market volatility, and volatility can create opportunity. If your portfolio has temporarily declined or you’re in a lower tax bracket this year:
A partial Roth conversion may help lock in today’s tax rates and grow retirement assets tax-free.
For business owners experiencing an off year, 2025 may be a strategic time to shift funds into Roth accounts while your taxable income is lower.
3. Your Retirement Income Strategy May Need Tweaking
If you’re planning to retire within the next 5–10 years, now’s the time to fine-tune your income strategy:
Ensure your retirement income plan accounts for higher inflation and less predictable bond performance.
If you’re relying on annuities or fixed-income products, interest rate changes could affect pricing and payout structures.
Review any interest-sensitive insurance products (e.g., IUL, whole life) to understand how today’s rates affect long-term values.
4. Cash Isn’t Always King: Even at 5%+ Yields
Money market and high-yield savings accounts are paying better than they have in years. But don’t mistake cash for a strategy.
Cash is a short-term parking spot, not a retirement plan.
Inflation can erode purchasing power, even when yields look attractive.
For both business and personal finances, ensure cash balances serve a defined purpose, i.e. emergency funds, business reserves, or near-term liquidity.
Final Thought: The Best Plans Adapt
The Fed’s “summer pause” doesn’t mean financial planning should pause. In fact, it’s the perfect time to revisit your strategy while others are sitting idle.
Ready to Take the Next Step?
Economic shifts don’t have to derail your retirement, but they do require a smart, adaptive plan. Whether you’re a pre-retiree considering Roth conversions or a business owner weighing borrowing strategies, we’re here to translate today’s rate environment into confident action.
Schedule a conversation to ensure your retirement strategy is on track, no matter what the Fed does next.
Adam Yates, CFP® is a Wealth Management Advisor with nearly 20 years of experience in financial planning. A graduate of Western Kentucky University, Yates is a Certified Financial Planner®.
Securities and/or insurance products offered by WealthSouth * NOT FDIC/FINRA/SIPC insured * May go down in value
*NOT financial institution guaranteed *NOT a deposit *NOT insured by any federal government agency. WealthSouth is a Division of Farmers National Bank, Danville, KY.