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Rates of return

There are warning signs in the EBRI analysis about longer-term consequences that policy makers should also consider and implications for retirement readiness should historical averages return.

By Nevin Adams | Updated on September 11, 2013

Having just concluded a long driving trip, I was reminded again just how helpful the technology under the hood of today’s automobiles can be: the warning lights when you’ve still got enough gas left to find a gas station, the low tire pressure light that tells you of a slow leak before you have a flat tire, the binging that lets you know you’ve left your headlights on (again), and my personal favorite, the klaxon-like bell that alerts you that your parking brake is still engaged (since that red “brake” light on the dashboard clearly wasn’t sufficient notice).

For some time now, the Federal Reserve has held short-term interest rates near zero in an effort to support an economic recovery — and has, in fact, announced its intention to maintain that policy until such time as the recovery seems to have taken hold. However, as many retirees and workers have discovered, those historically low interest rates are crimping their retirement savings — and a new study by the Employee Benefit Research Institute quantifies the impact of a sustained low-interest rate environment on America’s retirement readiness.

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