While term deposits offer safety the rate of return means these asset rich retirees will have to make do on less than some pensioners.

“Everyone cheers loudly when the RBA cuts rates,” Association of Independent Retirees Maitland president Maurie Thies said.

“Cutting rates only adds another $100,000 to Sydney house values.”

The official cash rate is just 2 per cent and retirees are lucky to see term deposits much higher than this.

“If you’ve got $1 million invested at 2 per cent that’s only $20,000 a year,” Mr Thies said.

“You can’t live off that.”

Mr Thies said blue chip stocks like bank shares by comparison have returned 8 per cent a year recently and would tempt some retirees.

For others the risk it too great.

“You have to be able to sleep at night,” Mr Thies said.

Maitland accountancy firm Pitcher Partners said there was definite trend toward stocks among self-funded retirees.

“You’re lucky to get a term deposit with a three in front of it,” Maitland partner Michael Minter said.

“[Low rates] have been driving demand for shares in stocks like Telstra and the banks which are big, solid companies. 

“People are saying ‘I’ve got nothing from term deposits but I can invest in bank shares and get three or four times the return’.”

Mr Minter said retirees must understand the risks before they invest.

For example the retiree might need to cash in when the stocks are low to scrape together a deposit on an aged care facility.

“For someone who is getting on shares are not necessarily a good idea when they don’t have a lot of time to ride out troughs in the share market,” Mr Minter said.

National Seniors Australia CEO Michael O’Neill said self-funded retirees with term deposits had effectively had their weekly income cut in half with all the rate cuts.

“It’s really important for people to shop around for the best rate,” he said. “People might pick up a quarter or half percent if they’re flexible with the investment timeframe.”

Mr O’Neill urged caution.

“Folk in my experience have been more inclined to leave their money where it is because they are risk averse,” he said