Low interest rates have been the norm for so long now it seems as if the term “low” is a relative one. Pundits who look at the latest Fed action last December talk about the impact of a 0.25% rise in the Federal Funds rate as something dramatic but let’s just settle down a bit. Not much is going to happen with a 0.25% rise in anything. In fact, for retirees who are living off of their savings and social security, low rates are hurting them badly.

If the Fed Funds rate were at say 5.00% the economy would be humming along providing decent returns in equities as well as higher savings rates. Social security increases based upon inflation rates are practically nil and for those who have their funds in a basic savings account, the returns are so low that some seniors find they’re eating away at their principal and not living off the interest just like they planned. For those looking for a slightly higher yield with little risk can look to bonds but those yields too are microscopic.

Analysts are now arguing if the Fed raised rates too soon as stock exchanges try to find some footing. Too soon? The previous Fed Funds rate bump was 10 years ago. We’re now living in an environment where the Fed Funds rate is effectively at zero, or at least zero plus 0.25%. Investors in real estate are doing much better and financing costs are still extremely low but for those who need rates to rise a little more to pay the bills, well, it doesn’t look as if they’re going to get relief anytime soon.