Janet Yellen and the Federal Reserve announced an interest rate hike -- so what happens to retirement saving? (Photo: AP)

The interest rate hike could be a double-edged sword for retirees and for those investing for retirement—but it’s not all bad, since although it will be cutting value on outstanding bonds on the one hand, it will be cutting risk on the other.

According to a Money report, while bond funds—a common investment strategy for those nearing and in retirement—have dropped since the Federal Reserve announced its rate hike, with typical core bond funds falling 0.8 percent over the past week, higher yields on newly issued bonds will reward income investors, with the 10-year Treasury now yielding 2.6 percent; back in June, it only returned 1.5 percent.

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