Older Americans Unretiring Due to Elevated Prices and Rocky Financial Positions
According to recent data, the cost of living is causing older Americans to “unretire” to deal with increased prices and unstable finances. Grocery staples like eggs are now luxuries for many people on a fixed budget. Although prices seemed to be coming down earlier this year, recent data signal that the end of elevated inflation remains elusive. The consumer price index (CPI) rose 4.9% in April from a year prior, although this is below the generational high of 9.1% in June 2022. However, overall CPI was flat from March, after months of slowing price increases.
Shelter prices are up 0.4% from the last month, with housing costs at 8.1% higher in April compared to a year earlier. Shelter, which is responsible for a third of CPI weighting, was a key factor driving CPI higher despite declines in other categories.
Housing is not optional, and Americans are increasingly spending more on rent. This disproportionately impacts low-income people and older adults, especially those on fixed budgets. Renters tend to have lower incomes than homeowners and are more affected by income and rental price changes. Nearly 10 million households headed by people aged 65 or older pay more than a third of their income on housing, and half of these pay more than 50%.
An average of 10,000 Baby Boomers reach retirement age each day. Unfortunately, the inflation-driven affordability crisis and the Federal Reserve’s interest rate hikes meant to combat inflation have driven housing costs higher. As a result, retirees are moving back into the labor force. According to a survey by Paychex, 55% of retirees who went back to work said they did so because they needed more money, and one in six retirees is considering returning to work. Their work ethic is welcomed by employers, and their presence may alleviate worker shortages. However, postponing or ending retirement is a hard choice to make.
Many older adults find themselves in deteriorating financial positions due to massive stock market losses in 2022, with some $12.2 trillion in wealth wiped out as the Dow, S&P 500, and Nasdaq lost 8%, 19.4%, and 33%, respectively. In an AARP survey late last year, more than a third of people 65 and older described their financial situation as worse than a year prior — up from just 13% at the start of the year. While large shares of Americans across age demographics expressed financial struggles, older Americans were more pessimistic about conditions improving for them in the future.
Social Security and Supplemental Security Income (SSI) benefits increased by 8.7% — more than $140 per month — at the start of the year; however, the extra Social Security dollars are not enough. Savings and investments should be a cushion for retirees even through difficult periods.
The Biden administration and congressional Democrats passed a climate change bill that they falsely labeled the Inflation Reduction Act. This bill neglected to address rising food, housing, or energy prices — the most basic and critical needs of households. Any climate savings would take years to come to fruition and could be offset by new costs for households, particularly for new electric vehicles, which could cost tens of thousands of dollars. Meanwhile, the green subsidies cost more than three times what the law’s supporters claimed.
Reckless federal spending triggered inflation to skyrocket. Anyone promoting an agenda of inaction on government overspending, especially during debt ceiling negotiations, isn’t helping seniors, but contributing to their hardship.
Original Story at www.usatoday.com – 2023-05-29 20:08:39
