For retirees, no relief in sight from low rates

Rates tumble as Federal Reserve's easy money policy keeps going
OCT 20, 2014
There is no relief in sight for retirees and other savers, who have borne the brunt of the Federal Reserve's easy money policy, as interest rates have once again tumbled to lows not seen in more than a year. The benchmark 10-year rate plunged to just below 2.2% last week as fears of a new recession in Europe and even disinflation, as well as China's slowing economy, brought foreign money flooding into the U.S. bond market. The fear that the strong U.S. dollar and the resulting falling demand for U.S. exports might transmit Europe's economic weakness to the U.S. economy will likely keep the Fed from ending its program of quantitative easing and trying to increase interest rates any time soon. As a result, savers have little hope of earning a return on their savings in bank accounts or money market funds. Normally that might induce them to put more of their accumulated savings into the stock market, but while interest rates have been declining again, so too has the stock market, as equity investors also fear weakness being transmitted to the U.S. from Europe. The strategy will differ for each individual based on the financial situation and risk tolerance of each. For some, that will be to stand pat and wait for interest rates and the stock market to turn. For others, those with higher risk tolerance, now might be the time to increase equity positions, buying when stock prices are lower.

Latest News

GLP-1 users are trading retirement savings for their prescriptions
GLP-1 users are trading retirement savings for their prescriptions

A Nationwide survey finds 47% of GLP-1 users have never discussed the drugs’ financial impact with an advisor, even as many dip into savings.

Inspired Healthcare sale price of properties is 59% of $1.2 billion sold by advisors
Inspired Healthcare sale price of properties is 59% of $1.2 billion sold by advisors

The hundreds of millions of dollars from a sale of Inspired Healthcare properties does not mean an immediate windfall for investors.

Class action alleges Webull misled investors about China operations
Class action alleges Webull misled investors about China operations

Its SEC filings said one thing - a congressional probe said another.

Investors accuse Netcapital of inflating revenue through sham deals
Investors accuse Netcapital of inflating revenue through sham deals

Sham agreements allegedly padded revenue by 345%.

Pre-retirees are looking for flexibility, security, and guidance when it comes to retirement income: Cerulli
Pre-retirees are looking for flexibility, security, and guidance when it comes to retirement income: Cerulli

"Most pre-retirees are uncomfortable making key retirement income decisions without an advisor's help," said Chris Bailey of Cerulli.

SPONSORED Built on insurance experience to deliver on long-term promises

Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.

SPONSORED In the Age of AI, Trust Becomes the Advisor's Greatest Asset

As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor