Problem
Timothy, a Financial Planner has a 50-year client who has semi retired by reducing his working hours and intends to fully retire at 55. The client has significant debt, including a mortgage and credit cards. The client has heard that, most economists expect interest rates to remain at historically low levels for several years. Given this forecast, the client wants to take advantage of the low rates and purchase an investment property. What should the FP advise? Encourage the client to borrow at lower rates to increase his investment returns. Discourage him from assuming interest rate risk by accumulating more debt. Tell him to delay retirement until interest rates rise to provide him with higher returns on bonds. Encourage him to pay down the mortgage before paying down credit card debt.