Mid-Missourians Worried After U.S. Credit Rating Drops
FULTON - Mid-Missourians said Monday they worry about their finances after the U.S. lost its AAA credit rating Friday with Standard and Poor's credit agency. The move to AA+ is likely to raise interest rates and borrowing costs for consumers, as well as the American government.
Judy Bastean, a semi-retired Fulton resident, said she is worried she won't have enough money to fully retire for some time. She's not sure if her 401K can support her financially after she stops working.
"My 401 is going down the tubes fast. I'm semi-retired and right now, the horizon doesn't look too good that I'm going to be fully retired," Bastean said.
Callaway Bank investment advisor Tim Borman said people on fixed incomes are most vulnerable when markets plummet. He said when interest rates go down in savings and certificates of deposit, it makes it more difficult to pay for increasing costs of living.
"It's just like a consumer - if you have lower credit, you're going to have a higher interest rate. And now that our government's debt rating has been lowered, potentially we could have to pay higher interest rates," Borman said.
But, Borman warns pulling all money out of the market is never a good option. He said the stock market has highs and lows. Acting on emotion will only hurt investments in the long run.
"The market is never going to be a straight line. It's going to be a roller coaster - up and down. We're definitely hitting some serious speed bumps right now," Borman said. "And so, it's just one of those things that hopefully you've got your money spread out and diversified."
S&P has given the U.S. a AAA credit rating since 1941. In a statement, the credit ratings agency gave the new U.S. credit rating a "negative" outlook, indicating another possible downgrade in the coming months. Monday marked the worst day on Wall Street since December 2008.
Click here to see the full report from Standard and Poor's.