It’s been four years since COVID-19 reared its ugly head, yet we’re still dealing with the damage it left behind. Since its start in 2020, the pandemic has thrown our economy into a frenzy, forcing the federal government to try to prevent a recession while combating inflation. This has led to a series of changes — some specifically targeting interest rates. Since 2022, the Federal Reserve has raised key interest rates nearly a dozen times, impacting things like the stock and housing markets. But how is it impacting federal programs like Social Security?
Generally speaking, lower interest rates seem like a good thing, especially when it comes to making big purchases like buying a new home or car, but that’s not the case for retirees who are relying on Social Security benefits or fixed-income securities for income. Here’s why: Lower interest rates lead to lower yields on fixed-income assets, which means the monthly payments retirees rely on will most likely be lower than expected. This could become a real problem for older adults who depend on this income to pay bills and buy groceries. But lower interest rates don’t just impact older adults — they affect Social Security’s finances, too.
