Moody's Downgrades US Credit Rating, 30-Year Treasury Hits 5% (How to Increase Your Retirement Income Guaranteed)
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Tuesday, May 27, 2025
Moody's downgraded the US credit rating for the first time in history. This is the last of the 3 major credit agencies to downgrade the US credit rating. The primary concern is the increasing level of government debt. As a result, the 30-year treasury bond yields rose to 5%. This is the highest level since 2007. Bond buyers will demand higher interest (yield) to purchase government bands due to the increased risk. Bond yields and higher borrowing costs will be higher until the government addresses fiscal responsibility. Higher bond yields are one of the greatest threats to stock market asset values. Many large institutional investors shift their investments from the stock market to the bond market to lock in long term cash flow. 30-year treasury yields at 5% are a common benchmark for institutional investors to shift. The 4% withdrawal rule is widely recommended to ensure you don't run out of money in retirement with a high likelihood of success. If you increase your withdrawal rate to 5%, your likelihood of success decreases significantly. Current Guaranteed Lifetime Income withdrawal rates: - Age 65: 7.5% guaranteed for life - Age 75: 8.5% guaranteed for life - Rates increase as you are older You can increase your income significantly with 100% likelihood of success. You cannot outlive your income. Higher bond yields increase fixed asset returns. Insurance dividends, annuity, and guaranteed lifetime income returns are expected to increase for the next 5-10 years.
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