Wednesday, January 25, 2012

The Fed Shafts Retirees

The Fed just announced its intention to keep interest rates low at least through the end of 2014. This has, and will have, a number of implications for the markets and the economy. Retirees who supplement their income by investing in fixed income investments will be particularly hard hit as CD rates and rates on lower risk bonds will likely stay low for some time. This way of supplementing retirement income used to work when people didn’t live as long and interest rates were higher. Now it is time to put that idea in the waste basket, longer life expectancies plus low interest rates equals disaster if you want to live off interest from fixed income.

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