By Anne Tergesen
Low interest rates may be a boon for those in need of a loan. But they are anathema to retirees, who must live on their investments and the income they generate.
According to the latest installment of a quarterly poll by Wells Fargo & Co. and Gallup, Inc., investor confidence declined sharply in recent months from +40 in February to +24 today. Among retirees, the decline has been especially sharp — from +61 a year ago to +38 in February to +17 today.
For retirees, low interest rates are a big part of the problem, according to Karen Wimbish, Wells Fargo’s director of retail retirement.
“A year ago, retired investors were three times as optimistic as working Americans and now retirees are less optimistic,” Ms. Wimbash said in a press release.
“Our questions on interest rates show the impact low rates are having – they are challenging for retirement nest eggs, particularly when core inflation rate growth is about 3% a year and CD rates are yielding less than 1%,” Ms. Wimbash says.
Conducted from May 4-12, the poll includes responses from 1018 individuals, each with investments of $10,000 or more. The responses indicate:
- 33% of respondents say low interest rates will cause them to delay retirement.
- 45% of non-retirees and 34% of retirees fear that today’s low rates may cause
- them to outlive their money.
- 26% of non-retirees and 19% of retirees say low rates will cause them to put money in investments they might have avoided.
- 32% think today’s low interest rates are likely to lead to a sharp increase in inflation.
- 29% of non-retirees say rising healthcare costs have reduced their ability to save for retirement
- 12% say rising healthcare costs have forced them to delay retirement.