Since the beginning of this month, a number of people have been facing an important financial decision. They need to decide whether they should renew or seek an alternative. What do I mean by that? Well, in case you haven’t heard, the Federal Reserve is lowering interest rates.

That’s good news for borrowers on such big-ticket items as mortgages and car loans. But lower rates are not good news for savers with money in the bank. It’s quite likely that the interest you earn on bank and credit union deposits will also be lowered.

If you’re the owner of a bank certificate of deposit (CD), you’re fortunate in that you locked in a rate at the time of your deposit. A rate that’s guaranteed for a specified length of time, one year, five years, whatever.

But on your anniversary date, you should anticipate that the rate that’s offered will be lower than the one you locked in. Typically, the banking institution sends a letter informing you of the lower renewal rate. And, oh by the way, you have ten days to decide. Although the institution might decide for you. If you don’t respond within ten days, you’re automatically renewed.

I suspect many people will just accept the rate that’s offered and not take the time to talk to their banker or financial advisor. But you should.

With your money in the bank, the principal doesn’t fluctuate. Stocks, bonds and mutual funds, however, have been known to be volatile. Plus, bank deposits earn interest and the FDIC and NCUAA protect both bank and credit union deposits up to certain limits.

The point is that money in the bank is pretty darn safe. The risk with a bank deposit is loss of purchasing power due to inflation. For example, if inflation is at 5 percent and your bank deposit is earning only 3 percent your money may be intact, but it’s losing purchasing power.

No matter what the interest rate, you should maintain money in the bank as an emergency fund. If you already have an adequate cash reserve and a long-term time horizon, however, you don’t need to accept a lower rate. Rather, I suggest that you do some homework and some legwork.

Consider exploring some alternative investments. Yes, there is market risk and the possible loss of principal. And no, that won’t happen with bank deposits. But other investments offer the possibility of much greater appreciation.

An advisor can help you determine where you are relative to your financial goals, objectives and risk tolerance. In the simplest terms, if you move money from a bank into an investment, you’re altering your risk profile. It may or not be an appropriate move, but you should know and understand the amount of market risk you’re shouldering.

Our Federal Reserve has the dual mandate of keeping prices stable and employment at a maximum. Fortunately, inflation has been trending lower. But politicians have recently been promising policies and programs that would likely drive it back up.

Renewing a CD at a lower rate doesn’t sound like a big deal, but over time it can be. The goal is to find the right balance between the money you need now and the money you’re going to need down the road.

Email your questions to kenmorris@lifetimeplanning.com

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment Advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Society for Lifetime Planning is not affiliated with Kestra IS or Kestra AS. https://kestrafinancial.com/disclosures

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. Comments concerning the past performance are not intended to be forward looking and should not be viewed as an indication of future results.

Labor Day weekend serves as a reminder that summer is over and it’s time to prepare for cooler weather. You can see it happening all around. Boaters are hauling their boats out of the water and preparing them for storage. Runners, cyclists and other outdoor enthusiasts are wearing extra layers of clothing. And some golfers are even putting their clubs away.

Labor Day is sort of like a starters pistol at a track meet. It encourages us to get going! Over the years, I’ve participated in the Labor Day walk across the Mackinac Bridge. And I’ve talked to many walkers who were taking on the challenge after some sort of health issue, such as a stroke or physical injury. I commend such people who set goals, especially after a health setback.

Since there is not an official holiday to do so, I suggest that now is a good time to assess your financial goals. There are far too many procrastinators that don’t even think about retirement until they’re close to the finish line.

If that’s you, if you’re in your fifties or sixties without a well-planned road to retirement, it’s time to get going. It doesn’t matter what your occupation is, or whether you’re salaried or punch a clock. You need to have clear-cut financial goals and the knowhow to achieve them throughout your retirement years.

Start by looking at what your income was 15 years ago. For example, if you’re currently 65, what was your income when you were 50? You can find these numbers on your old tax returns or a current Social Security income projection. Got the number? Now ask yourself if you could support your current lifestyle on what you were making 15 years ago.

That’s essentially a snapshot of retirement. Except for modest increases from Social Security, most retirees are on a fixed income. So your income 15 years from now will be pretty much the same as it is today. The cost of living, however, will be higher. That’s why it’s so important to have an adequate nest egg that can generate consistent income throughout the retirement years.

How long will that be? Statistically, if you retire in your sixties, you can expect to live another twenty years. Over that period there’s a probability that you will experience at least one severe economic downturn. Possibly even two.

Are your finances prepared for a financial storm? Imagine walking across the Mackinac Bridge with high winds, driving rain and swirling water below. It can be frightening. There are numerous investments that provide protection in the event of certain downturns. But you can never be sure what roadblock might suddenly appear. And there is no one thing that can shield your finances from everything.

You may or not experience one or two financial setbacks over the twenty or so years of your retirement. But the statistics say you will. It’s really important to be mentally and financially prepared.

I think it’s great that there’s a holiday that honors the labor force. Hard working Americans certainly deserve some recognition. So be proud and get out and enjoy your day. And please don’t lose sight of your goals. Don’t use rosy projections for planning your future. The better you’re prepared, the smoother the road will be.

Email your questions to kenmorris@lifetimeplanning.com

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment Advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Society for Lifetime Planning is not affiliated with Kestra IS or Kestra AS. https://kestrafinancial.com/disclosures

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. Comments concerning the past performance are not intended to be forward looking and should not be viewed as an indication of future results.