Interest rates cut to an all-time low a blow for baby boomers

The Reserve Bank has cut down the official interest rate to an all-time low of 1.75 per cent, but it’s

The Reserve Bank has cut down the official interest rate to an all-time low of 1.75 per cent, but it’s a blow to retirees who are relying on their savings.

The RBA announcement could see retirees losing as much as $1,250 on a 12-month term deposit of $500,000, or $625 on a $250,000 term deposit.

National Seniors Australia CEO Michael O’Neill says the 0.25 percentage point cut would further disadvantage older Australians on low, fixed incomes.

“Many pensioners and self-funded retirees hold term deposits because of the security and peace of mind they represent,” O’Neill says.

“These same people are also facing the double whammy of cuts to their pension or part-pension when eligibility rules change from January next year.”

A low interest rate means a lower return, or barely a return now.

He says in the lead up to this year’s Federal election older people need less uncertainty and more reassurance on how they can make ends meet.

“For too many, the prospect of another hit to their dwindling incomes does not fill them with confidence,” O’Neill says.

At least one major bank, NAB, will pass on the interest cut in full.

While the remaining big four banks might wait until they know the outcome of the Federal Budget before making any decisions.

The 1.75 per cent rate is the lowest cash rate in Australian history, and ends 12 months of rate stability from the Reserve Bank.

What do you think of the Reserve Bank’s decision to drop the rate? Do you have concerns about the state of the Australian economy following this rate cut?

  1. Brian Abbott  

    These bastards have no feeling for we pensioners who were never lucky enough to get super or redundancy pay. The dollars we have are in a fixed term deposit currently getting 2.75 percent. This is interest on the same amount of money we have had invested for 20 years and are afraid to touch. It is there for the annual bills such as rates and insurances that the pension does dot run to. We have already cancelled our private health cover this year.

  2. Ian Foster  

    Interest rates will be what interest rates will be.
    What should change is the deeming rate on which pensions are assessed. Some twit set it at 3% when the bank rate was already around 2%. This is the real inequity.

    It is all very well saying retirees should spend down but from experience with our own parents we know that money needs to be in the bank or accessible investments against RADs when you or your partner need nursing home accommodation.

  3. Pingback: Is this the biggest blow to Baby Boomers ever? - Starts at 60 - Raw Boomers

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