Interest rates have dipped to record lows, which is great for millennials interested in buying homes when they have large amounts of student debt. But for baby boomers, low interest rates could negatively impact their life savings right before they're set to retire says Quartz reporter Allison Schrager. Baby boomers are at peak wealth now but are getting a low return on their savings and will face more expensive retirement.
The decline in interest rates, which has been trending for about 20 years, makes bonds and annuities more expensive and undermines baby boomers' years of good stock returns. Schrager writes:
About 10,000 boomers retire each day. After retirement, when you have fewer sources of income, you are more vulnerable to swings in the stock market. Between such high prices for bonds and annuities and the fact that many boomers have meager retirement savings to begin with, some will feel pressured to stay in the stock market hoping to earn higher returns. But this leaves them exposed to risk; a bad day in market can destroy retirements and a boomer’s sense of security.