How Can Monetary Policies Be Used to Assist the Elderly?

In an economy, economists face difficult decisions when dealing with the retired population. A retired population within an economy acts with much differently than a working population. The working population depends on income in order to build assets and be able to buy goods and services in their life. But, by the time a member of the working population chooses to retire, they depend completely on the assets they’ve built during their working lifetime in order to support their livelihood. However, one of those assets is generally a large nest egg saving deposited in a bank. That means that these investments are reliant upon the interest rates imposed by the banks to allow them to grow. By incorporating monetary policies, a government can protect these savings for the retired population in the community. A monetary policy represents a policy that adjusts the interest in the economy. By raising interest rates, the government can effectively protect the savings of the elderly by assuring their assets grow steadily on an annual basis. This works because as the interest rate increases, the saving grows by a larger percentage annually.