Federal Reserve Chairman Bernanke’s actions will impact seniors and retirees again

Many years ago I recall reading that workers in Japan were saving a larger percentage of their pay checks than Americans. Let me share some actual numbers I just verified by my friend Dr. Google.
In 1975 Japanese workers saved 23 percent of their disposable income vs 10 percent by Americans. In 2000 American savings dropped to one percent and is probably even lower today. The most recent data on Japanese workers from 2006 is that they saved at 3.2 percent. We surely can’t argue with factual data. With all of our mortgages and credit card debts we appear to be living from paycheck to paycheck.

So while we head into a recession U.S. Federal Reserve Chairman Ben Bernanke continues to cut and cut and cut the prime rate which impacts ROI of our savings accounts. In the past two quarters the prime rate was cut 100 basis points (one full percent). If the Fed. cuts the rate to 2.5 percent by the end of this calendar year as projected, seniors may find their savings interest rates lower than the cost of inflation. Who knows.We may see the day when we will be charged a fee to deposit our money in the bank.

How many millions of senior citizens live on Social Security and their modest investments in Money Market and CD accounts. When you pass 65 most tend to be more cautious and not risk takers in the stock or bond markets where paper losses may take more years for recovery than they years to live. So while many seniors clip coupons to save at the grocery store, and do the best they can to cope with rising food and energy costs, they see their savings accounts interest rates continue to slide down a very slippery slope.

For the most part we are speaking of the greatest generation. Those who answered the call by Uncle Sam to enlist in the military during WWII. As honorable Americans they will again suck it up for the good of the country. They are stuck between “a rock and a hard place.” While I can understand the need to prime the pump to get our economic engine fired up let us be careful on extension of credit to risky borrowers. And lastly. Let us pray that our greatest generation survivors and their spouses do not end on welfare by the time this recession ends.


About Larry Gilbert