Trump’s Bid to Fire Lisa Cook

What It Means for Fed Rate Cuts and Your Retirement

The financial world is buzzing after President Donald Trump announced that he’s firing Federal Reserve Governor Lisa Cook. Cook, appointed by President Joe Biden in 2022, responded defiantly, stating Trump lacks the legal authority to remove her under the Federal Reserve Act, which requires “for cause” for dismissals, a high bar. With Cook vowing to sue this drama signals deeper implications for retirees. At LegacyHaven Advisors, we’ve long warned about coming rate cuts and their impact on fixed-income yields. Let’s unpack the motives behind Trump’s move, what it means for Fed policy, and how you can protect your fixed income.

Why Is Trump Targeting Lisa Cook?

Trump’s attempt to oust Cook, citing unconfirmed mortgage fraud allegations appears to be a strategic play to reshape the Fed. The underlying motive? Control. Trump has long pressured the Fed to cut rates, criticizing Chair Jerome Powell for holding rates steady at 4.75%–5% amid tariff-driven inflation concerns. With Cook’s potential removal and Adriana Kugler’s recent resignation, Trump could fill two vacancies, securing a 4-to-3 majority of appointees on the seven member board if his nominee, Stephen Miran, is confirmed. His current appointees, Christopher Waller and Michelle Bowman, already dissented for rate cuts, signaling alignment with Trump’s push for looser policy.

Rate Cuts Are Coming, Act Now to Lock in Yields

It’s no longer a question of if the Fed will cut rates, but by how much. Powell’s August 22 Jackson Hole speech signaled a September cut with street estimates of 25 basis points (.25%). A Trump influenced Fed could push for deeper cuts, potentially 75 basis points or more, lowering the federal funds rate significantly by 2026. But as we’ve noted for months, rate cuts reduce yields on new fixed-income assets like bonds, Jumbo CDs, and Multi-Year Guaranteed Annuities (MYGAs). For example, 10-year Treasury yields already dropped from 5.3% to 4.38% after the September 2024 cut.

If your portfolio includes fixed-income assets, check their maturity dates. Expiring MYGAs, bonds, or CDs may roll over into lower yielding options post rate cuts. For those without fixed income holdings, now is the time to act. Select MYGAs offer guaranteed payouts up to 5.75% annually for 10 years with tax deferral, outpacing many bonds or CDs. Locking in these rates now secures your income before yields fall further.

Inflation Risks and Non-Correlated Assets

Aggressive rate cuts could fuel inflation, especially with tariffs pushing up prices. Our post, “Inflation and Retirement,” highlighted assets like Treasury Inflation-Protected Securities (TIPS) and commodities to combat rising costs. To further protect your retirement, consider non-correlated assets like annuities and cash value life insurance. Indexed annuities deliver lifelong guaranteed income, with some offering inflation-adjusted payouts, unaffected by stock market swings or Fed policy shifts. Life insurance, such as whole life with cash value, provides tax-deferred growth, and tax free access, acting as a stable hedge against inflation. These assets ensure essentials like healthcare or housing are covered, no matter how rates or markets move.

Secure Your Fixed Income Before Rates Drop

Trump’s push to control the Fed signals more aggressive rate cuts, threatening fixed-income yields. Review expiring MYGAs, bonds, or CDs to lock in high rates like 5.75% on MYGAs. Explore indexed annuities for guaranteed income and life insurance for stability. Diversify with inflation-thriving assets, as outlined in our “Inflation and Retirement” post, and consult an advisor to tailor your plan.

Try our Retirement Income Calculator to see how rate cuts impact your portfolio and how fixed-income assets can protect you. Ready to safeguard your retirement? Schedule a complimentary strategy call today and build a resilient plan.