Why is this year different from all other years for seniors? Inflation. The latest numbers show a whopping inflation rate that’s the highest since 1982. This means that everything you buy will be more expensive. You see this impact at the gas pump, the grocery store, the doctor and, frankly, all over. The issue is that you don’t have a choice not to buy certain things.
It’s interesting, because, we sort of have a love-hate relationship with our financial world. We love that the economy is back roaring at a full-employment rate and that almost anyone can get a job if they want one. We also love that wages are going up and that we are back in the car and eating out and traveling. But at the same time, we hate that this growth breeds inflation, resulting in costs for everything rising. We also may support the Ukrainians in their war with Russia, but we hate the costs to us.
Why Are Seniors More Affected by Inflation?
There are several reasons why inflation is harder on seniors than others. Let’s start with the fact that most seniors live on a fixed income. Inflation is not an abstract idea … it’s real. The income you get can come from many sources, including Social Security. It should be noted that a cost-of-living-adjustment (COLA) is built into Social Security. In fact, this year there was a 5.9% bump. This translates into the average Social Security benefit in 2022 getting boosted to $1,657 per month, up $92. This sounds great, but the annualized inflation rate is running at 8.6% over the past 12 months, the Bureau of Labor Statistics reported on June 10. That more than wipes out the Social Security benefit increase.
Seniors with conservative portfolios are also seeing a hit to their savings and investments. It’s prudent to be invested conservatively as you age because you shouldn’t be taking big risks. But these conservative lower returns also mean that inflation will hit you harder as you have less to spend on goods and services that are rising in price.
But let’s face it: As seniors, you have “been there and done that.” You’ve gotten through tough times before, and you can do it again.
To help you along, here are some tips to lessen the hit inflation is taking from your income.
Tip No. 1: Be Smart about When to Claim Social Security
If you can, delay claiming Social Security. You may …….