BP Employees,

There are a lot of changes happening with interest rates as we close out 2024, and it is important to know how these changes could impact your BP Pension (BP RAP). If you have been watching the news, you are probably aware that things are somewhat up in the air with the economy. Let us break it down and see how this all connects to your retirement plans.

The Fed’s Recent Moves

The Federal Reserve just cut interest rates again – this time by 0.25%, bringing the federal funds rate to 4.25%-4.50%. Although this is the third rate cut this year, they are hinting at fewer cuts next year, meaning the good times might not last. What does this mean for you? The way interest rates affect your BP RAP pension depends on the direction the Fed goes. And right now, it is a bit of a mixed bag.

How Does This Affect Your Pension?

  • Retirement on the Horizon? The current rate cuts might work in your favor, especially if you are thinking about taking your lump sum. Lower rates typically increase the present value of future payments, which could bump up your lump sum. But with the Fed likely slowing down cuts, we might see this benefit start to fade as 2025 rolls around.
  • Economic Outlook: The economy is holding steady, for now. Consumer spending is strong, and while inflation has come down a bit, it is still higher than where the Fed wants it to be. There is still a lot of talk about whether the economy can keep growing at this pace without causing new problems (like inflation creeping back up). And if the new administration moves forward with its proposed changes, we could see more bumps in the road that affect things like job markets and consumer prices (aka, inflation). It is not all smooth sailing just yet.
  • What Happens Next? Right now, the Fed is expected to cut rates a couple more times in 2025, but that forecast has come into question recently. Just six months ago, Wall St was expecting deeper cuts by mid-2025, but now those forecasts have shifted – with many thinking the Fed may only cut one- or two-times next year. So, while things might still be somewhat favorable for your pension, do not count on this trend continuing forever.

What Should You Do?

If retirement is in the near future, you need to take a second look at your options. Interest rate changes could have a big impact on your pension, and it is not something you want to miss out on if you are planning to take a lump sum. But do not panic – just stay informed and make sure you are doing what is best for you.

If you are feeling uncertain, that is exactly why we are here. Our team specializes in BP pension planning, and we would be happy to help you evaluate your options and make the best decisions for your future.

Want to talk? Email us at info@capstonewealthadvisors.com or call (877) 739-6007. We’re here to help you navigate the maze.

Stay informed and let us make sure your retirement stays on track.

Best wishes,

Capstone Wealth Advisors

Bellingham, WA

877-739-6007

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