How Low Interest Rates Are Impacting Retirees
It’s difficult to earn more than 1 percent interest on money held in a savings account or certificate of deposit. And interest rates for savers aren’t expected to go up any time soon. The Federal Reserve Board has announced its intention to keep interest rates low at least until late 2014.
Most adults support this policy, with 73 percent of working Americans agreeing that low interest rates are good for borrowers and the benefits outweigh the costs, according to a recent Wells Fargo and Gallup survey. But retirees, who are depending on the interest their savings generates to help finance their retirement, view low interest rates much less favorably. Only 47 percent of retirees think low interest rates are good for borrowers, while 43 percent say low interest rates primarily hurt investors.
Current interest rates “are challenging for retirement nest eggs, particularly when core inflation rate growth is about 3 percent a year and CD rates are yielding less than 1 percent,” says Karen Wimbish, director of retail retirement at Wells Fargo. “Some people may feel like they’re pushing mud up hill.”