1 November 2011

Joy for some, pain for others after today’s interest rate cut

Retirees living off interest-bearing investments will be the biggest losers from the decision to cut official interest rates today.

The Reserve Bank of Australia this afternoon slashed rates by 25 basis points.

Retirees who live off the interest generated by term deposits and other investments, and who are no longer dependent upon employment income, will be affected by today’s cut.

National Seniors chief executive, Michael O'Neill, says over 50s who have paid off their mortgages will lose out with lower returns.

“While it’s good news for families with mortgages and retailers, it’s not so good for retirees who depend on that source of income,’’ he said.

“A combination of rising living costs and falling interest rates will leave many retirees feeling the pinch.”

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With a quarter of a million members Australia-wide, National Seniors is the consumer lobby for the over 50s. It is the fourth largest organisation of its type in the world.