Inflation rocketed by 6.2% in the 12 months through October 2021, the fastest pace since 1990, and retirees on fixed incomes are feeling the painful pinch. They’re seeing prices soaring for everything from rent to gasoline to Medicare prescription drug premiums, and low rates on bank savings accounts aren’t helping.
A story by Kerry Hannon on NextAvenue.org, said the nonpartisan Senior Citizens League received more than 200 emails recently “with many retired and disabled senders describing the dire situations they face as
rapidly rising inflation makes it impossible to pay the bills,” the group said in a statement.
“This is a tough time to be on a fixed income,” said Lisa A.K. Kirchenbauer, a Certified Financial Planner and founder of Omega Wealth Management in Arlington, Va.
But Kirchenbauer and two other financial advisers I interviewed have a few useful ideas for low- and moderate-income retirees during this time of spiking inflation.
Sadly, the outlook is getting grimmer for prices to settle back down anytime soon.
The Organization for Economic Cooperation and Development now expects inflation in the U.S. to average 4.4% in 2022. And an Allianz Life survey found that 78% of Americans expect inflation to get worse over the next year; 70% worry inflation will keep them from affording the lifestyle they want in retirement.
This winter, the U.S. Energy Information Administration forecasts, U.S. households will spend 54% more for propane, 43% more for heating oil, 30% more for natural gas and 6% more for electric heating.
Gasoline is already up by more than 50% from a year ago; the Zillow Observed Rent Index rose a record 14.3% year-over-year in October and Medicare prescription drug premiums will increase almost 5% next year, according to the Centers for Medicare and Medicaid Services.
Yes, Social Security will offer a 5.9% cost of living adjustment (COLA) increase in 2022; the highest in 40 years. The 2022 COLA will increase an average monthly retirement benefit of $1,565 to roughly $1,657.
“This would be the highest COLA that most beneficiaries living today have ever seen,” said Mary Johnson, Social Security and Medicare policy analyst for The Senior Citizens League.
But there will also be a 14.5% increase in Medicare Part B premiums for 2022, which will push the standard monthly premium from $148.50 this year to $170.10. (Medicare Part B covers doctors’ appointments, outpatient hospital services and some medical services not covered by Medicare Part A.)
To assist retirees on fixed incomes grappling with higher expenses, the Senior Citizens League is urging Congress and the Biden administration to issue $1,400 stimulus checks to Social Security recipients.
Kirchenbauer’s view: “I think a fourteen-hundred-dollar stimulus check is a great idea, but that’s only going to go so far. My guess is that we will be dealing with higher prices for at least a year.
So, lawmakers need to be thinking about what other support they can give to seniors in terms of tax breaks and stimulus, as we are doing for families with children.”
Zaneilia Harris, a Certified Financial Planner and president of Harris Wealth Management Group in Upper Marlboro, Md., told me: “I think the true strength of a nation is how it helps those less fortunate, the young, and its non-wealthy retired population.”
But how can retirees on fixed incomes weather inflation right now? Read more at NextAvenue.org