Higher Interest Rates Could Be Trouble for Retirees

Higher interest rates can sound like good news—especially if you’re earning more on CDs, savings accounts or bonds.

But more interest income can create unexpected costs for retirees. Depending on your income, those extra earnings can potentially increase Medicare premiums, cause more of your Social Security benefits to become taxable, or affect ACA health-insurance subsidies. The Washington Post

Why retirees should pay attention

In retirement, what you earn matters—but so does how that income affects everything else.

Higher interest income can increase your modified adjusted gross income. Medicare uses income thresholds to determine whether you pay additional Part B and Part D premiums, and generally uses a two-year lookback. Spokesman.com

It can also increase your “combined income” for Social Security. Depending on that total, up to 85% of your Social Security benefits may be taxable. Early retirees receiving ACA subsidies could also face reduced subsidies or repayment if their actual income ends up higher than projected. Spokesman.com

The lesson: higher rates aren’t always a free win

Seeing a higher yield on a CD, savings account or Treasury can feel like an automatic win.

But retirees need to look at the bigger picture.

A little more interest income today could potentially mean higher Medicare premiums, a bigger tax bill or reduced health-care subsidies later.

That’s why it’s important to understand how all your retirement income works together—not just chase the highest yield.

Read the full Washington Post report →

American Alternative Assets is a precious-metals dealer and does not provide investment, legal, tax, or retirement advice. Decisions regarding the purchase or sale of precious metals are solely the customer’s responsibility and should be made based on the customer’s own research and judgment. Source: Realtor.com, “10 Million Seniors Live in Poverty—Even as They Hold Trillions in Housing Wealth.”