Retirees Suffer in Current Low Interest Rate Environment

Financial Times personal finance columnist Matthew Vincent discusses the challenges that retirees face in the current economic environment.

The gist of the story is that these are brutal times for savers who need to generate interest income to fund current spending needs.  In other words, these are brutally difficult times for many retirees.

Vincent lists six reasons why higher interest rates are warranted:

  1. Savers need a return on their cash holdings.
  2. Low interest rates result in low levels of income from annuities and pensions.
  3. Pension plans starving for yield are increasing their risk profile.
  4. Low interest rates increase the present value of pension liabilities.
  5. Low interest rates lay the groundwork for future inflation.
  6. Artificially low interest rates distort capital flows and result in asset bubbles.

Source: Financial Times

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Good article.

Thanks for the link.

I have seen similar commentary elsewhere.