A lot is written about people who don’t save enough for retirement. But what about older adults who saved diligently, only to find the value of their nest eggs depleted in this low-interest rate environment?
I’m not talking here about stocks that take a tumble, slicing into their value. I’m talking about the interest rates that older people earn on money put away in bonds, money market funds, or certificates of deposit – and that they count on to supplement Social Security payments in their retirement years.
When these interest rates are at historically low levels, as they are now, people who counted on earning 5 percent to 7 percent annually from their savings can find themselves instead earning instead 1 percent to 2 percent. That can make a real difference in the affordability of their retirement plans and their ability to handle expenses such as payments for housing, food, prescription medications or out-of-pocket medical expenses.
For a really good examination of the issue, look at this story in the Minneapolis Star Tribune by Jennifer Bjorhus. It’s full of detailed analysis and personal stories that illustrate this problem which, it’s safe to say, is playing out with seniors in every community across the United States. Continue reading