Let's look at the opposite side of the coin.
I am one of those who are hurt badly by near-zero interests rates. I was self-employed nearly all of my working life. As a result, I have no company pension plan or 401k plan to fund my retirement income needs.
That's all right. Throughout my entire working life I spent conservatively, saved and invested (in stocks, bonds and mutual funds) a good portion of my income. In other words, I played by the rules. When I retired in 2012, the interest rates at 1% and lower for investment grade bonds and certificates of deposit were not nearly enough to live on. That has not changed. To prove my point, consider the following example of capital saved and the guaranteed (not speculative) income it can generate:
- $1,000,000 x 1% = $10,000 per year
- $1,000,000 x 6.5%(*) = $65,000 per year
(*) The average annual rate of return I was earning on investment grade bonds prior to the financial collapse in 2008.
With no debt, I can live comfortably on $65,000 annually. I cannot live on $10,000 annually. (Note: I cannot collect Social Security for another 8 years.)
In 2012 I had to choose between one of the following two options:
- Continue to work even though I had developed I health condition that prompted my retirement in the first place, or
- Move out of the U.S. to a developing country where I could earn adequate guaranteed interest income so I could retire, as planned ... and needed.
I moved out of the U.S. to a developing country. I am currently earning an average of 7.8% interest on a guaranteed (not speculative) basis through numerous time deposits ranging from 6.25% to 9.5%.
What is the most outrageous point of all? I have to pay federal income tax to the U.S. on my earnings outside the U.S. -- even though I earned it outside the U.S. and I do not use any U.S. services or infrastructure.
So ...U.S. citizens who have saved and invested throughout their working lives and are now retiring are being hurt badly by near-zero interest rates.