With some of the lowest certificate of deposit (CD) rates in history bank profitability may be up, but the account balances and investment income for senior citizens are down. Although all investors are feeling a squeeze on their investment returns, senior citizens are by far getting squeezed the most. If you take a quick look at the interest rates for the past four years since Bernard (Ben) Bernanke became the chairman of the Federal Reserve in 2006, it paints a picture of how seniors have watched their incomes deplete. In 2006, when Bernanke came on the scene, the federal funds interest rate was 4.5 percent. Later in the year of 2006, the average rate of return on a one-year certificate of deposit was 5.4 percent. At that time, retirees who had accumulated a nest egg of $100,000 had income coming in from their investments of approximately $5,400 per year.

Todays Retiree Income
Three, almost four years later, the investment income picture for seniors is quite different. For the same one-year CD, the average rate is 1.3 percent. If you compare this rate of return with the same nest egg of $100,000, seniors are now earning income from their investments of about $1,300 per year, which is a 76 percent decrease. At this point, inflation usually floats into the topic of conversation, with some saying that the decline in CD investment income is offset by a low rate of inflation. However, even with a flat line inflation rate, a 76 percent decrease is a huge chunk. Iinflation is creeping up during the first few months of 2010, which takes even more of a bite out of the spending power of seniors.

U.S Financial Crisis
As the country started to enter into what has been deemed a financial crisis, the Federal Reserve stepped in and took the steps necessary to keep the crisis at bay. In fact, it caused the Federal Reserve to cut rates to the lowest level seen in over 50 years. Not only did these measures help save banks from failing completely, but they also helped keep seniors and other investors from losing everything. Eighteen months later, the perspective is slightly different because banks have been given access to basically free money, while seniors who invested in the CDs are still in deprivation status.

Crisis in Context
In order to truly understand the extent of the crisis, monetary figures may help. Over $7.5 trillion in American wealth is invested in short-term investment products, which includes interest-bearing checking and savings accounts, money market funds, and certificates of deposit. When you compare todays wealth to 2006 rates of wealth, todays wealth equates to what is hundreds of billions of dollars less.

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