Neil Silverman, a Framingham engineer, diligently saved for decades, accumulating a nest egg worth more than $1 million.
But when Silverman reached retirement age, he encountered an unexpected hurdle: interest rates so low that his savings are generating little income. Even $1 million in the bank at 1 percent interest yields just $10,000 a year — not much to live on.
Comments
Pretty concerning article that someone who has a million in the bank feels that he cannot retire. How many retirees have a million in the bank? I would think it is a low percentage.
Full page Globe Bank ads bragging they pay .08% interest for long term bonds is nauseating. Your Fed is printing dollar bills wholesale to depreciate their value. Devalued currency is another way pay the national debt. If you don't believe that is a tax in disguise you are a Democrat. There is a whispering campaign among seniors to withdraw all their funds from IRA's and banks and put the cash in a safe deposit box or a home safe. They say do it as soon as possible so you don't leave a money trail for feds to grab it when you die or go into a nursing home. All this election seems to be about is lying about the health care fraud a large tax increases it contains. If you believe Democrats are going to rob the rich like Robbin Hood, you are not only delusional you are about to be in the poverty class. Iif you were one of those foolish people who actually saved some money instead of loading up credit cards they have their hands in your pockets waiting for your last moments on this earth.
Devalued currency is one way to pay down the national debt. Too bad our government refuses to use such a strategy. The inflation that everyone is sure will result from the Fed's policy is nowhere in site. Yes, such inflation could result if the Fed keeps applying the current policy even when it is no longer warranted. As long as we keep ex-Fed Chairmen like Alan Greenspan away from the controls of the money supply, this folly won't happen again.
After all, it was the tax cutting, deficit running during a booming economy that Bush used to turn our surplusses into huge deficits. Not only that but by giving us large doses of this medicine when it was not needed, he lessened its effectiveness during the current mess when it is needed.
Fed trying to use the only available means to keep the economy going because the Republicans refuse to allow a stimulative fiscal policy in the budget. If the Republicans would relent and let the President's agenda be voted on, it would relieve the pressure on the Fed of having to work against Republican policy in order to save the economy.
Imagine what would happen if we had fiscal and monetary policy working in the same direction for a change.
Well Mr. SIlverman: Hopefully you are not going to vote for Obama.
AFter 4 years of OBAMA - How can any voter believe Obama's lies about concern for the welfare of the middle class (trying to save for retirement) or the retired folks trying to live off their savings?
On July 24, 2011, the NYT printed the following, "Beyond the $700 billion bailout known as TARP, which has been used to prop up banks and car companies, the government has created an array of other programs to provide support to the struggling financial system. Through April 30, the government has made commitments of about $12.2 trillion and spent $2.5 trillion."
The scary consequences of Obama's bailout FAILURE- is that he is planning more of the same!!!!!!
Just remember, the whole bailout thing started with Bush.
These people should look at non-taxable municiple bonds. They are paying 4% or more. People have been scared off by the fear that cities will go bankrupt, but almost none have actually gone bankrupt and very few bonds have defaulted. With a little care these bonds are almost as safe as CDs. There are also municiple bond funds that only invest in insured bonds, which makes them extremely safe. If you commit to them for a year, there is usually no upfront sales charge. They are a great alternative to CDs and are tax free from Federal tax and, if you buy bonds from within your state, from State tax.
What is a retiree with over $1million nest egg doing investing in CDs? With high quality companies with decades long records of paying increasing dividends now paying at rates from 3 to 5%, that $1million could bring in $50,000. Along with Social security, Silverman could be taking in $70,000 per year, and the increasing dividends would also lead to capitall gains.
Just shows that the idea of people taking care of their own retirement investments is not such a good idea even for people as smart as a retired engineer.
I am a retired engineer also. My nest egg is almost back to pre-2009 levels and I have been living off the income from this nest egg for over 6 years.
They say that the worst thing that can happen to your retirement savings is to have a severe loss of value in the first years of your retirement. Well, that is exactly what happened to me. However, my diversified portfolioi of high quality, dividend paying stocks has kept my income at a comfortable level quite indepent of the current market value of my stocks.
Maybe the Globe could do all retirees a favor by reasearching and then explaining how this type of strategy works. I'd be glad to help the Globe, if they were interrested.
There are times when the Globe seems hopelessly out of touch, and this is one of them. I just can't feel too sorry for a 69-year old with a million bucks in the bank. There are so many people are out there who are truly needy. Why choose this man for your story?
Mr. Silverman's only real problem is that he doesn't want to touch the principal of his savings.
What is so confusing? Banks live on the difference between what they pay (deposits) and what they lend (loans). With mortgage rates at 3.25% and the cost of healthcare (not Obamacare) and the other benefits that are needed to attract good people, banks cannot make much money. No wonder they only pay .5% on a savings account. The 'community banks' are under much stress to pay for the sins of their larger brothers on Wall St and the big 'national' banks. Community banks didn't play with derivatives, credit swaps and all this other esoteric stuff. They just lent money to local residents and and took their deposits. And now they are regulated and paying for the sins of their larger counterparts. Time to regulate the problem and lay off the guys who always did it right. If this the overegulation of the non transgressors continues and the under-regulation of the transgressors (has a rating agency been sued or shut down yet?), we are all doomed. There are some community banks that made mistakes, but a $5 million dollar mistake pales in comparison to the $5 and $6 billion dollar mistakes that flow from the money center banks...
Figure it out. You can pay cash for everything (read: Never own a house) or fix this problem. Your choice...