THE president of the Dubbo branch of Australians Living In Retirement has warned the latest drop in interest rates will force more older people onto welfare payments.
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Evan Elliott said this week's 25 basis points cut to an historic low of 1.75 per cent would have a negative impact on people "trying to live off savings and bank investments".
"Things are getting pretty desperate for retirees because the interest rate has been getting lower and lower for a significant period of time," Mr Elliott told the Daily Liberal.
"People with mortgages might be clapping their hands but it is a very different story for those of us who have worked hard and saved our money with the intention of funding our own retirement.
"Income streams cannot be maintained when interest keeps dropping.
"There are fears that rates could fall even further. It is very worrying."
Mr Elliott said it was wrong to suggest all independent retirees were wealthy.
"A significant number of older people don't qualify for a pension but they are not rich," he said.
"They have assets but are cash poor."
"People with mortgages might be clapping their hands but it is a very different story for those of us who have worked hard and saved our money with the intention of funding our own retirement."
- Evan Elliott
Member for Parkes Mark Coulton agreed.
He said some retirees determined to remain self sufficient were living below the poverty line in order to "hang onto" nest eggs they had spent many years amassing.
"Others are going backwards financially because they keep having to dip into retirement savings just to eat and keep a roof over their heads," Mr Coulton said.
"The good news is that when funds get down to a certain level there is a government safety net providing a pension to carry people through."
Mr Coulton said the flat interest rate "on top of stock market gripes" had been a double whammy for retirees.
"Older people throughout my electorate are concerned," he said.
"But low interest is a two-edged sword - it is good for people looking to establish or expand a business and young people trying to buy a home.
"In 2008 a lot of value was taken off the stock market.
"Things are creeping back but some investors have not been able to recover their share value.
"The growth of the Australian economy is actually above most of the other countries in the world.
"That's not much compensation for retirees trying to live on investments but it shows that the world is experiencing a tough time.''
"This week's budget has included a number of measures designed to stimulate the economy.
"When things get moving again interest rates will start to sneak up again."