A Fed Rate cut isn’t good news for everyone
This week the Fed cut interest rates a quarter of a percent. The commentary is always about how this makes borrowing for consumers cheaper—lower mortgage rates, cheaper car loans, even a little relief on credit cards. Good news if you’re carrying debt.
But no one talks about what a cut in interest rates does to senior retirees. For us, a rate cut is a pay cut. When interest rates go down, the interest on retirement savings goes down. Like me, many seniors depend on that income to supplement Social Security.
And we’re not talking about a small group. Millions of retirees rely on safe investments like CDs, savings accounts, and bonds. When rates drop, so does the monthly “paycheck” from those accounts. Unlike younger borrowers, we’re not looking to take on new debt—we’re trying to live off what we’ve saved.
So the rate cut this week wasn’t good news for me.