Matt takes a walk through the interest rate environment of the past several years, from the near-zero rates of the COVID era to today's rates hovering nearer the historical average. Matt explains how the policy decisions of 2020-2021 (and before) suppressed interest rates, sending them steadily downward. During this period interest rates were predictable -- they would go down steadily -- and retirees looked to equities to produce income for their portfolio.

Today the market looks quite different. With the 10-year treasury around 4% (as of January 2026), fixed income is a viable asset for generating income again. However, interest rate volatility has re-entered the picture. When rates were near zero, the risk of interest rates moving sharply downward or upward was neglible, so interest rate risk could essentially be ignored. Now it's a material risk, so retirees must be careful in building their bond portfolio.

Matt explains how many retirees are still rooted in the thinking that made sense in 2020 and 2021, and that the market today presents new challenges. He outlines how bonds can be chosen and laddered to protect a portfolio against interest rate volatility, so that retirees can produce steady income for their portfolio while being hedged against rates moving up or down in the future.

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Investments in target-date funds are subject to the risks of their underlying holdings. The year in the fund name refers to the approximate year (the target date) when an investor in the fund would retire and leave the workforce. The fund will gradually shift its emphasis from more aggressive investments to more conservative investments based on its respective target date. The performance of an investment in a target-date fund is not guaranteed at any time, including on or after the target date. Diversification does not assure a profit or protect against loss in declining markets, and diversification cannot guarantee that any objective or goal will be achieved.

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It's Not 2020 Anymore: Interest Rate Risk Is Back