Rate Cut Has Put a Serious Impact on Those Retirees Who Rely On Returns for Funding Their Expenses

It is really unfortunate for the self funded retirees that the initial interest rate has been decreased to 2%. They are feeling the impact of low interest rates. It can be great news for those who are looking to borrow money, but it is not good for those who are relying on returns to fund their daily expenses.

A lot of people either completely or partially fund their own retirement. Such retirees are forced to switch to much risky investments to obtain better returns.

Many retirees have planned to keep their income in a good portion by producing assets in investments so that they can prevent the risk to their money. They are struggling hard to obtain good returns on their retirement benefits and simultaneously, they also want to access their money in case of any unexpected issues. But the lowering of interest rate has not made it easier for the retirees to achieve their goals.

Due to this low interest rate, some retirees are even forced to go for welfare payments earlier in their life. They are considering coming out of safer zones of bank deposits and bonds and going for more risky options like share market.

There are certain reasons due to which the interest rate has been reduced which are:

• Good monsoon: It is highly significant as good monsoon might pull down both afflation and inflation.

• High lending rates: These are a great concern as these are actually delaying the economic recovery. It has really affected the loan demand.

Thus, the news of low interest rates is generally not great for the retirees. It just does not matter how they strategize, their investments will have to suffer. They are sitting just with a hope that the interest rates in Australia will recover at some point.