With the surprise announcement last month of BP exiting Alaska, now is more important than ever that you pay attention to how interest rates can affect your pension balance.

August’s interest rates, affecting December 1st benefit commencement dates, dropped dramatically potentially setting up a so-called “perfect storm” for those of you who will be leaving employment with BP next year. Our proprietary forecasting model was highly accurate in predicting this drop and currently is indicating a small increase from August’s levels, but not substantially different. Meaning we are not expecting the slight increase to be a major impact on your pension.

The primary reason for this drop was mostly due to ongoing geopolitical tensions as well as the expectation that the Federal Reserve would lower interest rates again, which they did. The Federal Reserve’s decision to drop rates in its September meeting as was widely expected by most economists and professional investors and currently the probability they will implement another cut in October is at 65% according to the Chicago Mercantile Exchange, the world’s leading commodity and futures exchange.

If you look at this news from your pension’s standpoint it’s actually great news especially if you are a Heritage Employee and looking to retire later this year or early next year as you should expect to see a large increase to your pension lump sum value resulting from this sharp drop in interest rates.

Juggling the asset allocation of your 401(k) and timing when to take your pension can be a tricky task when markets are choppy. In times like this it is very important that you have someone in your corner who has the experience and knowledge to assist you in dealing with these situations.

If you are considering retiring within the next one to two years, we would highly encourage you to talk with one of our retirement planning specialists who can help you understand what your potential retirement timeline looks like and how to strategically plan your exit, please feel free to contact me directly at 877-739-6007 or at tyler@capstonewealthadvisors.com. As always, we will assist you free of charge and with no obligation.

Tyler E Ryan

Capstone Wealth Advisors




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