Letter: Bernanke's economic policies aren't helping senior citizens

June 11, 2013 

Our current economic plight was created in part by our government's efforts to raise middle class standards, particularly efforts to increase home ownership.

In so doing, the housing bubble was created and the newly created homebuyers who failed to honor their contracts caused the burst.

The government's solution was/is the various quantitative easing (QE) efforts spawned by U.S. Federal Reserve Chairman Ben Bernanke. The current QE3 is to buy about $85 billion a month of government debt instruments, thus keeping the current interest rate environment low.

Seniors who depend on IRAs and similar retirement accounts are faced with two dilemmas. The first, of course, is that the current interest rates are too low to generate anything approaching pre-bubble rates of income, thus forcing the investor to seek higher rates of income from much riskier investments or to start consuming the principle.

The second is a little more insidious. The Minimum Required Distribution (MDR) schedule has stayed the same, thus as one gets older the MDR increases as does the portion that is tax.

The net result is that a senior's income has decreased and/or has become riskier while their tax burden has increased.


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