Makin' Money

Grim news on retirement

Chris Farrell Jan 28, 2011

Debt and retirement don’t mix. Imagine the financial stress from not working while still paying a monthly debt tab.

Debt is one reason why so many older Americans are looking for work.

No wonder growing numbers of the elderly have or want jobs. A report from the Sloan Center on Aging and Work at Boston College found that 30 percent of unemployed workers over age 55 have more credit card debt than retirement savings; 41 percent have as much. The situation for employed older workers is less grim, but not by much: A study by researchers at Rutgers University found that 22 percent of older workers, the vast majority of them employed, reported increased credit card debt, and 12 percent said they had missed a credit card payment because of the economic downturn. Experts say many older Americans face the very real possibility of starting retirement in the red.

It’s a sobering post, well worth a close reading.

Higher interest rates are coming! Higher interest rates are coming! Odds are the forecast is right, but the fear and trembling that typically accompanies the prediction isn’t. The consultants at McKinsey & Co. debunk the notion that higher interest rates are bad for the economy.

Among the reasons is this insight:

Actually, in several ways, somewhat higher interest rates would be better for the economy than the extremely low rates of recent years. They would benefit savers (particularly retirees and pension funds) and therefore encourage greater household saving.

It’s about time savers were rewarded for their prudence.

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