'Trickle-up' poverty strikes the cautiously prudent

Jules Coco is a 58-year-old software programmer who takes a conservative approach to saving and investing. He fondly remembers the not-too-distant past when he and his wife could earn in excess of 5 percent interest on their certificates of deposit.

"We were more than satisfied with our little paltry 5.5 percent," Coco said. "I don't want to defy the laws of economics. I always believe in proportionate risk, proportionate return."

Today Coco is dismayed by two-year CDs ranging between 1 percent and 2 percent, with even lower rates for shorter-term CDs - not enough to keep up with inflation.

"What the conservative, cautious American is experiencing now is trickle-up poverty," Coco said. (He readily admits, however, that his reference to poverty contains more than a little hyperbole. "Am I about to go stand on a corner and shake a cup?" he asked rhetorically. "No.")

Ultra-low interest rates have cheered borrowers and spurred economic growth with cheap loans. But those low rates, slumping real estate values and cuts in dividends by supposedly blue-chip stocks rocked by the recession - especially banks and other financial services companies - have been tough on many investors. That includes seniors who have twin goals: preserving their life savings and augmenting their income from pensions and/or Social Security.

"They're getting a reduced amount of income from what they used to get, and it may be affecting their living standards," said Raleigh financial planner Frank Smith.

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