How will the interest rate cuts impact my Social Security checks?

You may have seen the recent news about about interest rate cuts, and if you’re taking Social Security, you might be wondering if this will affect your benefits.

If you are receiving Social Security, fear not.

Your benefits will not be directly impacted by events, such as interest rate cuts, because they are stable and do not change with the economy, according to Yahoo Finance.

Here’s why the Social Security payments themselves are not affected by interest rate cuts and what is affected instead.

Why are Social Security payments not affected by interest rate cuts?

Social Security payments are not affected by economic events, like interest rate cuts, because they are based on lifetime earnings that have already been accumulated.

Regardless of how much you have in savings or investments to supplement your retirement nest egg, Social Security benefits are not calculated based on how much you have accumulated in your savings or investment accounts.

Instead, Social Security benefits are designed to replace some of your income that you’ve earned before retirement.

What will be impacted by the interest rate cuts?

While Social Security payments will not be impacted by the recent interest rate cuts, individual retirement accounts with bonds or savings accounts may be affected.

However, lower rates can reduce income in low-risk investments, such as bonds and savings accounts.

“A lower rate may impact an individual’s income generated by those investments and could require them to step outside their risk tolerance to grab more return and keep up with inflation,” Faron Daugs, a certified financial planner and CEO of Harrison Wallace Financial Group in Libertyville, Illinois, told U.S. News & World Report.

But the effects of lower interest rates on these low-risk investments won’t be noticeable right away.

Only time will tell how lower interest rates will affect individual portfolios.

Financial planners recommend that retirees examine and, if necessary, restructure their portfolios, according to U.S. News and World Report.