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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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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.