Low interest rates have made life a lot easier for many borrowers struggling to make monthly payments. But for retirees, who have to live off their portfolios, low rates have caused huge problems.

A May survey from Gallup and Wells Fargo ( WFC ) confirmed what many people already know all too well: Low interest rates are destroying people's confidence about ever being able to retire. Fully one-third of those surveyed said that they expect low rates will compel them to work longer and delay their retirement, while 45% of current workers say they think low rates will make it a lot more likely that they'll outlive their money after they retire.

In particular, the survey points to deteriorating confidence among retirees. Last year, retirees were much more optimistic about their futures. Yet with core inflation outpacing rates on bank certificates of deposit by more than a factor of three in many cases, those living on fixed incomes are feeling the pinch -- and will continue to do so as higher prices reduce the purchasing power of their nest eggs.

To fight low rates, some retirees have taken drastic measures to fill their income gaps. Almost 20% of retirees have moved their money into riskier investments they probably wouldn't have bought if rates weren't so low. For instance, some retirees have turned to dividend-paying stocks, many of which pay out more income than bank CDs and other income-generating investments.

No single investment, however, is a perfect solution for income shortfalls. The best answer for most retirees involves using a combination of investments to generate income. Dividend-paying stocks may play a role in your portfolio, but putting all your money into stocks involves far more risk than the vast majority of retirees can afford to take.

Instead, consider other types of income-producing investments. Municipal bonds earn interest that isn't subject to federal income tax, but they also have higher yields than Treasury bonds of the same maturity -- even though you have to pay federal tax on Treasury income. Meanwhile, managed payout funds make fixed payments to their shareholders over time, and even if the income the fund portfolio generates isn't enough to cover a payment, the fund can go in and essentially return a portion of your investment back to you to cover your cash flow needs.

These low interest rates won't last forever. But while they do, make sure to do what you have to in order to ensure you have the income you need.

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Condley

Actualy what we need is a new currency. I propose the "Hern". One Hern would be worth 7 Dollars, plus 2.5 Euros, plus 1.75 Yen on Monday, Wednesday, and Saturday. Then on Tuesday, Thursday, and Sunday the Hern would be worth 3 Dollars, plus 6.8 Euros, plus 4.33 Yen. This would take the wild jumps out of the markets because nobody would be able to figure out just what a stock was worth by the time the Hern changed valuation the next day. And by leaving Friday "open", everybody could just give up that day and go fishing!

kittivers

My comments were in response to psridgel'sl comment about the value of the dollar. The dollar will not crash as long as the rest of the world buys our debt and feels safer in dollars than other currencies.That should continue until the long term trend mentioned in the second part of my post ruins us as a safe haven Europe's unraveling extends our lease a bit. And China is not immune policy mistakes and world market disruptions .

kittivers

The national debt never needs to be wholly repaid. It does need to be a decreasing percentage of GNP..

But as long as it simply rolls over continuously as the rest of the world continues to buy it at almost no interest rate, we'll be alright in comparison to most of the rest of the world..

What's not alright is the continuing outsourcing of American niddle class prosperity, with our security following our economy out the door. The biggest corporations are now world competitors in a world market

It really doesn't matter to them if the American economy and market share weakens as long as growth elsewhere more than makes up for it..

Libby smoke and mirrors?

psridgell

What a joke, with 16 trillion dollars in debt that cannot be paid back, ever, the U.S. dollar will crash sooner, not later, and all your savings won't buy a loaf of bread. I suggest buying gunsand lots of ammunition,and cookbooks for cannibals...

We liberals know Obama will take care of us.

larsarrupp

I average about an 8% return by investing in ETF's that hold preferred stocks. Closed end funds and mutual funds that invest in preferreds will do about the same.

siejoe

What about ANNUTIES-----

Annuities are ok. But they also suffer from low interest rates.

6 hours ago Report abuse Permalink rate up rate down Reply

democracks0

Evans a dope

wolfman

Obama must go and so should Berneke. A lot of good this loose money policy has done. Hasn't helped the job situation and hasn't helped us grow or improved the housing market. Yes is has really hurt seniors, just the ones that Obama promised to help. Seniors and the middle class--what a joke! He has done nothing except play with is rich friends. I advise seniors to wait it out until we get someone in office that can start America growing again. That will raise interest rates but not in a way that it will hurt us. Of course we could stay with Obama pile up more debt and then watch interest rates skyrocket before we go bankrupt.;

I think that's what he means by forward.................BO GOTTA GO !

luckycur

Invest, even if it hurts. When I was in the military 72-78, I made $212.00 monthly, plus $54.00 montly in combat pay. I began a stock purchase plan, and stuck with it through thick and thin. This allowed my spouse and I to retire at 42 years of age. We bought a cheap house, used cars, floor room furniture etc., it can be done.

podunkproductions

You Bet ! Nixon, Ford, Reagan era, that's what made it all possible.

15 hours ago Report abuse Permalink -1 rate up rate down Reply

ectullis

In any event Obsama must go.

MONTOOTH

Just remember, Obama did not create the mess. Eight, EIGHT years of Bush tax cuts (unpaid for), engagement in 2 wars (unpaid for), deregulation of agencies with oversight for our environment, financial security, and justice system (whatever realized savings from deregulation--went to the rich, Bush's cronies and the military industrial complex led by Cheney's cronies at Halliburton)--all of that was under the Bush administrations--I have no problem with people honesty looking at the facts and the record of Obama and saying, well, he did worse not better than Bush. However, when the facts are honestly evaluated, there is no way a reasonable person, regardless of your party affiliation and politics, can say the Obama one term administration is even close to being what Bush perpetrated on the country for eight years....EIGHT YEARS! You people voted for that joker TWICE.