You’ve probably heard some references to the idea that the central bank policy of keeping rates artificially low or negative hurts savers and is partially responsible for the widening wealth gap – the rich get richer and the not-so-fortunate face bigger headwinds. There are a few ways in which this policy harms the less-than-uber wealthy, some obvious and some not too obvious. I recently experienced one of the less obvious first-hand, and I’m still pretty peeved thank you very much, Mr. Mario Draghi.

The most obvious way is by reducing the level of income that can be generated from relatively safe investments. At the start of 2000, the 10-year Treasury bond yielded over 6.5%. Today it yields all of 2.4% while the High Yield 100 yields just 5.6%. Yep, junk bonds today yield less than the 10-year Treasury did at the start of the millennium.

What that means is savers have to take on a lot more risk to generate even less income than was possible 17 years ago. Think about that when you read about the shrinking Middle Class, part of our Rise and Fall of the Middle Class investing theme.

Good thing that the largest generation in American history is at or near retirement when they most need to generate income from their savings – argh! What this means is that this generation, which is the key demographic driver behind our Aging of the Population investing theme, is forced to take on way more risk than any prior generation to get a lot less out of their savings. The potential ramifications of this reality when we inevitably get a meaningful pullback in the markets is unnerving given the state of the average retiree’s level of savings and the dire straits of most pension plans. According to Vanguard’s 2016 How America Saves Report, the average 401K balance is $96,288, but for those Baby Boomers that are now turning 70 the average 401(K) balance is $200,358.Yes, you read that right… no wonder we keep reading the average Baby Boomer is under saved for their golden years.