Low interest rates throw wrench into retirements

  • Article by: JENNIFER BJORHUS , Star Tribune
  • Updated: August 27, 2012 - 1:57 PM

Setting money aside was supposed to be the key to middle-class retirement. But low interest rates mean that savings aren't generating cash like they were expected to.

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jcinmnAug. 25, 1210:56 PM

How to stimulate the economy? Two stimulus packages didn't work. Lowering the interest rates helped the banks but not the economy. Bernanke seems to have run out of ideas and Obama is saddled with a do-nothing NO Congress which is anti everything he suggests. Romney wants to stimulate the economy with the Bush Tax Cuts which haven't helped in 12 years and won't help in the next 100. Economists such as Paul Osterman, economics professor at MIT, have suggested raising the minimum wage (CNN Money 9/27/1) but no one cares to listen. We will struggle thru to November and the winner will have until January to come up with a plan. Meanwhile 20% of working Americans will be struggling to make it on poverty wages and people like John Folsom will watch their nest egg languish.

chuckdancerAug. 25, 1211:05 PM

It will only get worse since I noticed the people in this article seem to have the benefit of at least small pensions which obviously have disappeared from the scene replaced with "the opportunity to save". Couple that with wages that are moving backwards instead of forward and the relentless drive to separate any ties between business and retirement and the message is that the cost of retirement is not being dealt with in a realistic way. Sure, save for retirement and do it while receiving a wage that barely covers living expenses while working. There are groups of workers that have the difficult task of allocating their resources to best fund retirement but for an ever increasing population there isn't much to allocate. I suppose it has to be be that way or the ultra rich would have to get by with three homes instead of five or would not invest money as "job creators".

djm55422Aug. 25, 1211:11 PM

This is perhaps the best article I have seen in the Star Tribune. A lot of insurance products are skyrocketing due to this phony interest rate environment.

bill9844Aug. 25, 1211:17 PM

Raise the interest rates now and anyone with a home equity loan will be screwed. Many can't refinance because of the new stricter underwriting and will be foreclosed upon. The countries debt would also be subject to the same higher interest, so we would have the mother of all depressions.

wplettfanAug. 25, 1211:21 PM

As long as health care CEOs and Wall Street fund managers are making millions, who cares? Profits come before the welfare of the people. Making money for the investors comes before the well-being of the customers. It's those people who will take that money and create jobs. And if you believe any of this you are voting for Mitt.

jcinmnAug. 25, 1211:33 PM

I just cashed out my HSA which was paying 0.18 per cent per year on my balance. Then they started charging a "service fee" because my balance had dropped below their "preferred level". I get better interest from my IRA which has become my new HSA. The only advantage to a low interest bearing HSA is the "Saver's " tax credit on your 1040. the banks know this and profit from it.

mnnice33Aug. 25, 1211:35 PM

Come on people. Why always look for someone to blame. As one of the baby boomers who retired during this economic crisis I am suffering with lower interest rates and not even coming close to my plan for income from hard earned savings but it is what it is. It will change but I just hope during my lifetime. With lower interest rates on savings come lower costs on what I need as well. So there is some good in this but we need to look harder to find it. The glass is always half full or half empty as they say it is in the eye of the beholder.

jcinmnAug. 25, 1211:41 PM

chuckdancer "It will only get worse since I noticed the people in this article seem to have the benefit of at least small pensions which obviously have disappeared from the scene replaced with "the opportunity to save". According to CBS nightly news the "middle class" has suffered a 28% decline in spending power over the last decade. In addition the number of people in the "middle class" has dropped. The only way we can reverse this trend (call it the GWB TP Trend) is to replace some Republicans such as Bachman, Kline, Paulson with people who'll work with President Obama to get the economy on track and get corporate America to pay for the defense of its foreign ASSets and the 400 wealthiest Americans to contribute to the defense of their "foreign companies" (see above)

aviendhaAug. 25, 1211:43 PM

Don't forget that in addition to stifling wages and lobbying against raising the minimum wage, companies are also aging workers out of the workforce at 50 or even younger. I guess we're magically supposed to subsist on air for the last 30 years of our lives because we're not profitable enough to employ, we can't afford to fund our own retirements, and having the government pay for our health care and elder care is "socialism". Meanwhile various industries game the system for 5-10 years until they wreck the economy and whine for massive taxpayer-funded bailouts--while not firing ANY of their workers because they need to remain "competitive". Our priorities in this nation are completely screwed up. We've stopped being citizens and started being "overhead". And you know what executives love to do about overhead.

lewylewyAug. 25, 1211:43 PM

People invested today in near-zero rate bond funds will be hit with a double-whammy when those funds report bond principal declines when/if future bond rates go up.


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