According to the Reserve Bank of Australia (RBA) low interest rates coupled with an ageing population is proving problematic for the global economy.
And the growing number of retirees who are expecting to live off the interest earned from their superannuation savings may be seriously disappointed in the future.
“In a low interest rate world, the problems of providing retirement incomes will become ever more prominent,” said Reserve Bank Governor Glenn Stevens. “Overall, in a world where a higher proportion of the population wants to be retired and living – even if only in part – off the return on their savings, those returns are likely, all other things [being] equal, to be lower.”
“And there are more of such people, living longer,” he added.
Mr Stevens believes that, due to the world’s ageing population, there are fewer people of working age, which hamstrings the global economy by effectively reducing the ability to pay for welfare and public health care costs.
“Instead of five or six people for every retired person there’s two or two and a half,” he said. “It may be that jobs will be robotised … in the long run we may need that to some extent.”
And with health and aged care continuing to be a major focus of government spending: “The thing we have to most grapple with is to make our children more productive so they can earn enough to pay the taxes and help the capital return to keep us in our dotage,” said Mr Stevens.
Read more at www.sbs.com.au
Are you finding that low-interest rates are adversely affecting your retirement income? What ideas do you have for amending this issue? Are there enough jobs for older people to help them fund their retirement? Are there sufficient taxpayers to provide adequate contributions towards paying for health and aged care?