3 Financial Moves Baby Boomers Should Make Before the Fed Lowers Rates

Interest rates have been frustratingly high for consumers this year. And a lot of people are in a holding pattern on major purchases, like homes and automobiles, until rates come down.

President Trump has been exerting pressure on the Federal Reserve to lower interest rates. That’s the most he can do, though.

Trump cannot compel the Fed to lower rates, and the central bank will only do so once it feels the economy is in a stable place. With the threat of tariffs looming, it’s hard to know just how secure the economy is.

However, there’s growing consensus that the Fed will lower its benchmark interest rate during its upcoming September meeting. Once that happens, it could lead to lower borrowing costs for consumers.

That’s something all baby boomers should be aware of. And if you fall into that age group, here are three financial moves you may wish to make before a potential rate cut happens.

1. Open a CD or CD ladder

If you’re on the cusp of retirement, or already retired, it’s important to have a decent percentage of your portfolio in cash. That way, it’s protected from market fluctuations.

Right now, CD rates are pretty attractive. Once the Fed lowers rates, CD rates could fall.

This does not mean that CD rates will fall drastically, especially if the Fed only moves forward with a quarter-point rate cut. However, if you’ve been thinking about opening a CD, you may want to act sooner rather than later to avoid losing out on better rates.

You may also want to consider a CD ladder instead of a single CD. This way, portions of your money will free up at different intervals, giving you more flexibility.

2. Check your credit

The better your credit score, the more affordable it should be for you to borrow money once interest rates come down. If you’ve been waiting to refinance your mortgage or tap your home equity until that happens, now’s a good time to check your credit report and score.

If you see that your credit score has declined, you can take steps to raise it. Similarly, if you see red flags on your credit report, you can take time to address them before you’re ready to actually apply for a loan or line of credit.

3. Research big purchases — but don’t make them

You may be eyeing a big purchase for yourself, whether it’s a new vehicle or equipment to start a business in retirement. Although it pays to wait on financing a large purchase, it’s a good time to research large purchases so you know what costs you may be dealing with.

For example, say you’re estimating the cost of equipment and supplies for a home business at $5,000, but in reality, you’re looking at $10,000. That’s an important thing to know before you apply for a loan or line of credit so you’re not caught off guard.

There’s no guarantee that the Fed will lower interest rates in September. But if inflation stays relatively stable in August, then a September rate cut may be in the cards. Now’s the time to take action on the items above so you can benefit from higher rates while positioning yourself to capitalize on lower rates.