Zero real interest rates are a major problem for retirees

The income that can be generated from savings keeps falling and is now approaching zero for safe investments.  There was a time when $1 million in liquid assets would assure a reasonably comfortable retirement, but no longer.  Things could get even worse, however.  In Switzerland banks are charging people for savings accounts.  Some banks in the US are doing the same for large institutional accounts.

As a result, investors have been crowding into risky high-yielding stocks and junk bond funds.  These stocks and bonds have been dropping in value of late.  If retirees become concerned enough about losing their principal, prices could drop precipitously, at least for a time.

Now is a time to exercise caution even if it means foregoing income for awhile.