Interest cut bad news for retirees

Interest cut bad news for retirees

Superannuation & Retirement Income
WHY SAVE?  Cash rate change a blow to anyone living off simple low-risk investments.

WHY SAVE? Cash rate change a blow to anyone living off simple low-risk investments.

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IT MIGHT spell good news for those with a mortgage, but the August 2 interest rate cut has been described as bad news for retirees by National Seniors Australia.

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IT MIGHT spell good news for those with a mortgage, but the August 2 interest rate cut has been described as bad news for retirees by National Seniors Australia.

The organisation's chief advocate Sarah Saunders said the Reserve Bank's decision to lower the official cash rate by 25 basis points to 1.5 per cent would be "a blow to anyone living off simple, low-risk investments".

Ms Saunders called on the federal government to adjust the social security deeming rates accordingly.

"Having fallen steadily since 2011, interest rates are sitting at all-time lows," she said.

"Yet, the deeming rates, upon which pension entitlements are calculated, haven't shifted since March 2015.

"It's only fair that deeming rates are adjusted to more realistically reflect current earnings."

Ms Saunders also sounded a warning about the government's pending pension changes.

"Unless interest rates start to climb, self-funded retirees caught by the 2017 asset test changes will find themselves living off less than someone on a full age pension," she said.

"And if that's the case, the next generation will ask, Why save?".

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