Rock-bottom interest rates shored up banks, turned around the stock market and steadied the economy. They also put 82-year-old Wayne Wagner behind a lawn mower.
Wagner, a retired engineer, mows and sprays for weeds at an Independence fourplex he rents out to make ends meet. He bought the property two years ago when the interest rates on his savings dropped so low he couldnt get by.
Instead of collecting interest, Wagner now collects rent, fills vacancies and spends more time figuring out his taxes and the other paperwork that comes from being a landlord.
I should be fishing more, Wagner said.
Savers of all stripes have had to make other plans since the Federal Reserve embarked on its zero interest rate policy more than two years ago. They have little tolerance for the gyrations of the stock market, choosing instead to save through federally insured bank accounts and government-backed bonds. And that has meant less and less income as rates tumbled.
Then, at its early August meeting, the Fed vowed to keep rates this low at least through mid-2013.
Two more years of scant income for those whove lost work and had to turn to their savings unexpectedly. Two more years of pressure to take on more risk for little reward that can be passed on to the newest generation. Two more years to worry whether gasoline or food prices will finally outstrip fixed incomes in retirement.
It certainly is hurting anybody who was responsible, that saved. And its certainly hurting seniors who may be relying more on the interest to live on than me, said Dave Wininger, a business owner who has staked his retirement plan on savings.
Pain but no gain
Savers have gotten used to seeing their interest earnings dry up periodically.
Under then-Chairman Alan Greenspan, the Federal Reserve repeatedly drove down interest rates to offset some jolt the 1987 stock market crash, the Asian contagion, the Sept. 11 terrorist attacks.
Typically, the Fed brought rates back up quickly as conditions improved, and savers again were paid for their thrift.
That hasnt happened the last two times the Fed slashed rates.
Greenspans Fed held its benchmark rate below 2 percent for two and a half years. Current Chairman Ben Bernankes Fed has held it near zero for just as long.
And the Feds vow last month to keep rates low has only added to the anxieties of just about anyone who prefers the safety of earning income from certificates of deposit, money market accounts and other safe, fixed-income investments.
And for what?
I dont see how its helping anybody with the rates down, said Billie Wilson, a 78-year-old retired teacher hoping to leave money to a collection of great-great nieces and nephews. Maybe I dont know enough about the economy. All I know about is my own economy.
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