Rates Hit New Low - A Hidden TAX!

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This is of great concern to me as an investment adviser to retirees. The trend for the last three Decades has been down. From the US Government's (Taxpayers) point of view, this long term secular trend has allowed the borrowing of huge sums of money without suffering a proportional increasing in debt service. The average cost of the government debt is in the mid 3% range.

Many of those taxpayers are retired, or will be retiring soon, and a great deal of their money is properly invested in bank accounts, Certificates of Deposits and other highly rated bond investments. During the time when these people were saving thier money they were accustom to much higher rates than we have seen during the last few years. This makes it very difficult to generate income without significant risk to principal for retirement needs.


For these retirees this represents a hidden tax. The typical middle class retiree is often in a relatively low tax bracket, but the artificially low interest rates (Treasury Rates are being held below Inflation Rates) driven by monetary and fiscal policy represents as much as a 50% surtax on income generated to support retirement needs.  We need to consider this issue in the national political debate -JOHN



BOYDSTRATEGY.COM


If you would like John or Rosemarie Boyd to speak to your group or organization on financial planning or investment strategies contact Rosemarie at rboyd@boydstrategy.com or call her at 508-754-3226. The comments on this blog do not represent individual Investment, Tax or Legal Advice, and do not represent an offer to buy or sell any security. Consult the appropriate professional before acting on any idea seen here.