Historically low interest rates haven’t really reaped the kind of benefits they normally would in a post-recessionary period. In reality, economic growth has stagnated, the real estate market remains in the gutter, and consumer confidence has yet to recover to pre-recessionary levels.
But bargain-basement interest is also having unintended effects, including what the Associated Press called “killing savers”—like retirees and others who depend on interest income. In turn, the Federal Reserve's low-rate policies may actually be hurting the country’s economic prospects, reducing the income of these “savers” by some 27 percent in the last three years, and therefore decreasing the amount they can pump back into U.S. economy.
With individual spending accounting for about 70% of the U.S. economy, and low interest rates reducing the ability for some of the nation’s biggest spenders to do so, the nation’s central bank has unwittingly created a vicious cycle over the last two years in an effort to combat the worst economic climate since the Great Depression.
According to an AP report: “The Fed is ‘turning the faucet, and nothing's coming out,’ says William Ford, a former president of the Federal Reserve Bank of Atlanta. ‘I don't see any pluses on the plus side of the ledger ... But they're ignoring the strong negative effect that they're having. They're killing savers. Retirees are earning nothing on their life savings.’ The Fed this month announced plans to keep short-term rates near zero through mid-2013 unless the economy improves. And in a speech Friday, Chairman Ben Bernanke will likely lay out options for lowering long-term rates even further below the current near-record lows. One option is a third round of Treasury bond purchases by the Fed. Such purchases would be intended to nudge rates even lower, to encourage spending and borrowing and raise stock prices. But additional rate declines would likely also further drive down rates on savings vehicles. Low rates have already hurt retirees and other savers. Savings accounts, on average, are yielding 0.15 percent, 1-year CDs 1.15 percent and even 5-year Treasury notes only 1 percent.”
Now, many retirees, who did all the right things and saved all of their lives in the process, are facing the realities of the low-interest economic effort—with few options other than to continue working in some capacity just to stay current. Others face cut-short careers in industries that just couldn’t survive the economic downturn, forced out of the workforce or into lower paying work, even as their interest income is downsized as quickly as their employment prospects.
But there are options. In light of these “saver killing” retirement challenges, if you are a recent retiree seeing your savings syphoned, the time to consider other options is NOW. A personal bankruptcy can free up the money you need to avoid being left empty-handed in your all-important later years.
Specifically, a Chapter 7 bankruptcy can virtually wipe away significant consumer debts, if any, to get you back on track. An added bonus is that retirement vehicles like 401(k)s and IRAs are safe from creditor claims. And if you’re behind on your home or other possessions, a Chapter 13 option can even keep you in your home sweet home as you plan to dispense with other unsecured debts in as little as three years.
So, if you’re an older American who’s been affected by the economy, and low interest rates, and are now considering new ways out from underneath ever-increasing debt, knowing a qualified bankruptcy attorney can also help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost. The bankruptcy lawyers at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Call toll free to +1-919-646-2654 TODAY.