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Encore
A blog about living in and planning for retirement

For Retirees, QE3 Means More Income Woes

Today’s announcement by the Federal Reserve puts the central bank in bold new territory – with a relatively open-ended commitment to buy more bonds until the job outlook improves “substantially.” The Fed also said that, barring a sooner-than-expected return visit from the Inflation Fairy, it intends to keep its benchmark interest rate at close to zero until mid-2015.

Stock investors are reacting as though Christmas came early (and might last until mid-2015). The Dow jumped more than 200 points on Thursday, and the S&P 500 hit its highest level since 2007. But for retirees, there’s likely to be less celebrating, more sighing, because the safer investments they’ve traditionally relied on (think Treasurys and CDs) will continue to yield next to nothing. How should they and other investors cope with the seemingly endless low-interest era? MarketWatch columnist Robert Powell offers some ideas in  7 QE3 Moves to Make With Your Money. Among his takeaways: Consider buying natural resources, the ultimate hedge assets in case that Inflation Fairy returns.

 

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    • Retirees and fixed income folks need to be more concerned about the eroding of the value of the dollar. Printing money makes their income/savings less valuable every day. This administration just condemned these folks to a lower lifestyle while helping wallstreet again! I thought Obama was for helping the poor?

    • Here again, the Federal Reserve rewards those who have been irresponsible and penalizes those who have been responsible, like many retirees. These actions by the Fed, that ostensibly boost stock values, also help to boost the Fed’s balance sheet thus enabling the Fed to dump AIG shares at artificially high prices. Bernanke is not fooling anyone. The long term consequences of these short term fixes will be horrific.

    • Actually, future infatuation is being priced into stocks. A wheel barrel manufacture would be a good investment. We will need something to tote our money in.

    • Bad news for savers, but in a few years, the FED has to sell their bloated balance sheet, and yields will pick up substantially.

    • Bad news for savers, but in a few years, the FED has to sell their bloated balance sheet, and yields will pick up substantially.

About Encore

  • Encore examines the changing nature of retirement, from new rules and guidelines for financial security to the shifting identities and priorities of today’s retirees. The blog also explores news that affects retirement, from the Wall Street Journal Digital Network and around the web. Lead bloggers are reporter Catey Hill and senior editor Jeremy Olshan. Other contributors include The Wall Street Journal’s retirement columnists Glenn Ruffenach and Anne Tergesen; the Director for the Center for Retirement Research at Boston College, Alicia Munnell; and the Director of Research for Pinnacle Advisory Group, Michael Kitces, CFP.

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