For Ruth Putnam, an 86-year-old widow in a small retirement community here, the consequences of the Federal Reserve's continuing interest-rate cuts are painfully clear: She's selling her English Rose china collection, piece by piece.

Putnam relies on interest income to make ends meet -- and her investments are earning only a fraction of what they did when she retired 24 years ago. So she's selling her treasures to make up some of the difference.

"I don't know what else I could do," she said.

Across the country, retirees and older adults are struggling with the opposite side of falling interest rates. The Federal Reserve has made 13 cuts in the past 2 1/2 years, chipping its benchmark rate to 1 percent, from 6.5 percent.

While cheap money has helped fuel a housing boom and may yet spur capital spending, the low rates are ravaging interest income from older Americans' investment vehicles of choice -- certificates of deposit, bonds and money-market accounts.

Low interest rates always have been a threat to retirees relying on interest income. But the relentless decline of the past two years, with no uptick in sight, is taking a particularly hard toll on elderly CD and money-market investors. These are the people who tried to do everything conservatively with their money.

For the most part, they didn't chase Internet stocks, and they didn't load up on debt. They sacrificed to pay off the mortgage while building nest eggs to leave their kids.

"They've had their plans in place for 40 years, and now, through no fault of their own, they've had the rug pulled out from under them," said Robert Allsbrook, an economist with AmSouth Bancorp, of Birmingham, Ala., who spends much of his time visiting customers in retiree havens such as Clearwater.

After the federal-funds rate was cut by a quarter-point, to 1 percent, on June 25, Allsbrook's telephone rang steadily with calls from older investors, many berating him for "letting" the Federal Reserve squeeze their income.

Many residents of this sprawling suburban town, bordered on the east and west by coastal bays, are feeling the pressure these days. According to the 2000 census, Clearwater has the largest proportion of senior citizens -- 21.5 percent -- in U.S. cities with at least 100,000 people.

Putnam's retirement community, founded 37 years ago, is called On Top of the World. Here, 10,000 residents, many of them transplants from the Northeast and Midwest, live in condominiums in three-story buildings with whimsical names such as "South Seas" or "Royal Chateau." A grand arch marks the entrance to the development; behind it lies a grassy mall featuring a giant globe and a column-filled sculpture garden. Activities include golf, bingo and shuffleboard, as well as classes in yoga and art.

The people who live here make up retirement's middle class. Median annual income for people 65 and older in the community's ZIP code is estimated at $29,696 this year, just $209 more than the national number for that age group, according to demographic-research firm Environmental Systems Research Institute Inc. in Redlands, Calif.

Most residents cover daily bills through Social Security checks and interest generated from their plain-vanilla investments. The luckiest have pensions, though the development's many widows sometimes receive a mere sliver of their late husbands' former benefits.

So, with interest rates at a four-decade low, one big piece of income is drying up. The average rate for a one-year CD purchased last week was 1.59 percent, nearly four points off the average rate in 2000, according to Bankrate.com. The return on some money-market funds approaches zero after subtracting for overhead.

The cuts aren't leaving the residents destitute or starving, but they have been forced to start cutting back once again after a lifetime of scrimping and saving. They can't visit family as often, eat out or go to shows. Department stores now are out of the question for many; some have decided that membership at a new Costco discount retailer down the street is too much of a splurge.

Pat Wheeler, a Clearwater financial planner, got an earful while manning an advice hotline two months ago for a local TV station. The retirees he talked to typically had several hundred thousand dollars in CDs that had been paying 7 percent interest a few years ago and were now down to 2 percent, he said.

"If you have $200,000, that's $14,000 a year in interest that's gone down to $4,000," Wheeler said. "It's quite a cut in pay."

Putnam said she has had to scrimp "to the point that a lot of my friends think I'm cheap."

Twenty-four years ago, she and her husband relocated from New Hampshire, where he managed a country estate and she worked as a hairdresser. They kept most of their money in CDs, then paying 18 percent interest. They had some exposure to stocks through a mutual fund, which they picked because the fund company also was called Putnam.