This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Get Some Guarantees Before You Retire

NEW YORK ( TheStreet) -- Add low interest rates to the updated list of lead-pipe locks in life, right up there with death, taxes and the Cubs failing to win the World Series.

According to the BankingMyWay Weekly Savings Rate tracker, bank savings rate bottomed out again this week, falling to 0.079%. But that's like winning the lottery compared with bank checking account interest rates, which stand at 0.052%.

Bank rates are low because the Federal Reserve wants them that way -- savers be damned.

The Fed's thinking is that low rates lead to cheap money, and it wants money flooding the economy so consumers and businesses will seek more credit, borrow more money and buy cars, homes and other big-ticket consumer goods.

But there's another side to that equation, and it's not favorable to bank savers -- especially retirees.

That's the conclusion of a study out this week from Prudential Financial (PRU - Get Report) that says the current low interest rate environment has put Americans' retirement security at risk.

The survey turns the Fed's own argument on its head.

Sure, low rates may spur more borrowing and more spending from consumers. But low rates, as Prudential notes, fuel an investment environment where conservative investments (think bank certificates of deposit and U.S. Treasury bonds) have "little investment growth" and "are at risk of being exhausted earlier than expected."

Complicating matters is that U.S. retirees are living longer, meaning lower investment returns in their golden years could really hit retirees where it hurts -- in the pocketbook.

While Prudential considers the low interest rate climate as a high priority for older Americans, most don't seem to be paying close attention.

"While the majority of Americans insure their most valuable assets in order to safeguard against significant financial loss, many don't think to insure their ability to generate lifetime income," explains Bob O'Donnell, president of Prudential Annuities. "Today's guaranteed-income products were designed to help protect retirees from running out of income in retirement, regardless of market conditions or increased longevity."

One way out of the low rate problem is to "insure" future portfolio revenues by buying up individual annuities (which provide a measure of guaranteed income), or other guaranteed income products available in 401(k) plans and individual retirement accounts. Ask your company's plan sponsor or your financial advisers what products work best for you.

"Life insurance helps families manage the risks of not living as long as expected, while guaranteed retirement income products help Americans manage the risk of outliving savings in retirement," O'Donnell says.

You may not realize it, but low savings rates may be dragging your retirement fund down, and your financial future down with it.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
PRU $77.64 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs