Low interest, bond yields 'punishing' for retirees

London

LOW global interest rates are crippling baby-boomer retirees who are now at risk from underperforming bond and equity markets.

Despite the rise in US Federal Reserve rates to 0.25 per cent, saving rates and 10-year Treasury bond yields at 2.2 per cent are still punitively low. At that bond yield, the amount of time a compounded return would cause the original investment to double would be 32 years.

A paper of S&P Capital IQ estimates that US retirement savings now need to be nearly four times larger than what was required 40 years ago to generate the same level of low-risk inflation-adjusted investment income. Growing numbers of men and women who have not be…