Back in the Reagan years (for young people explain that means 1980s) we were getting close to 8 percent on our CDs in the bank/savings&loan. Old people used to rely on interest to live on so as not to touch the principal.
Now that we're in retirement, we get close to 0 percent. And accounting for inflation, it is as you would say, negative interest whittling away our buying power. The government is stealing from us via inflation while they are on a spending spree. Young people don't understand the concept of saving and earning interest - because they can't see any interest. I just hope inflation doesn't make my pension checks meaningless in the next few years as my nest egg disappears. Yes, we can't win.
Now that we're in retirement, we get close to 0 percent. And accounting for inflation, it is as you would say, negative interest whittling away our buying power. The government is stealing from us via inflation while they are on a spending spree. Young people don't understand the concept of saving and earning interest - because they can't see any interest. I just hope inflation doesn't make my pension checks meaningless in the next few years as my nest egg disappears. Yes, we can't win.
Your problem is that you understood the part about putting money aside, but didn't take the time to learn where to put the money. I spent years learning about different investments, and have put money into stocks, and real estate. We have been retired for years and our net worth keeps increasing.
It is not too late, take your money out of passbook savings accounts and put it into low cost index funds. Do the same thing with low-yielding CDs. There is lots of free advice on the internet.
The distortion of the interest rate by government intervention causes many problems both for the retired and those trying to save for retirement. Traditional, non-speculative retirement portfolios depend on interest for a major share of the income they generate, and with rates under 1% it is very hard to have sufficient assets to generate enough income. For example, paying a $7500 property tax bill (not uncommon at all around here) requires $750,000 in capital, even before considering the additional capital necessary to pay the taxes due on the income.
In the 1980s when interest rates were 8%, the property tax burden for the same property was less than $3000 so $37,500 in capital was sufficient, before considering income taxes.
The combination of increasing taxes and decreased interest rates has caused the amount of capital needed for this one expense to increase by a factor of 20.
In the 1980s, a $50,000 a year retirement income from interest required around $625,000 in capital. In 2014 a $50,000 a year retirement income from interest requires 5 million dollars in capital. For most people generating $625,000 in capital through saving and active investment is a lot more possible than generating $5 million dollars through savings and investment - particularly when overall market returns for less speculative investments were higher.
For many people, the traditional approach to retirement saving won't generate enough income unless they either work or invest actively and speculatively throughout retirement.
It is easy to see why people are discouraged from saving.