..........People who are in their 70s and 80s had retired at a time when inflation was not a big menace and most banks paid a rate of interest which was either close to or around the doubledigit mark. But times have changed. The rate of interest paid by banks in fixed deposits is now very much linked to the rate of inflation and, more often than not, they are lower than the inflation rate. This naturally leaves FD customers in a slightly disadvantageous position as they are usually left with a negative real rate of interest (rate of interest rate of inflation). Added to this is the incidence of income tax on some of the retired people. The two combine to force retired people to either dip into their savings corpus to meet their standards of liv ing, or cut down on expenses to manage with whatever income they generate on their retirement corpus...........
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