Interest rates continue to hover at a historically low level and this has placed retired senior citizens who draw their income partly from savings in a difficult situation. People who are planning for retirement are going to need to prepare to adapt to an environment of low interest rates by making certain critical adjustments. One good way to improve cash flow in a low interest rate environment is to pay off debts starting with the higher interest liabilities first. People could also look outside the lines by looking at “Treasury securities with maturities of perhaps three to seven years.” It might also be wise to consider waiting to take guaranteed payouts from an employer’s pension or annuity until interest rates are higher. “If lower interest rates are translating into less income for you every month, then this may be a good time to convert traditional IRA or qualified plan balances into Roth IRA accounts, so that you can squeeze that additional taxable income in under your current tax bracket.”
See Mark P. Cussen, How Retirees Can Combat Low Interest Rates, Investopedia, March 1, 2016.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.
