Ben S. Bernanke — the former Federal Reserve chairman — recently reported at a conference of the National Investment Center for Seniors Housing and Care that he had trouble refinancing his own mortgage.
I think Bernanke’s comment, which was covered by reporters from Bloomberg, supports an argument I’ve been making for months: The current ultra-low interest rates aren’t doing much, if anything, to help consumers increase spending.
Anyone in the long-term care insurance (LTCI) community knows that low rates are hurting issuers of annuities and long-term disability insurance, and slaughtering issuers of LTCI.
Certainly, LTCI issuers may have made some mistakes when they priced their coverage — but they thought solid investment rates on high-quality bonds would give them some wiggle room. Instead, rates fell to the floor, and insurers have had to use all of that wiggle room just to keep their heads above water.
What’s bad for annuity issuers and LTCI issuers is terrible for retirees.