Here’s Why Inflation May Be Less Expensive For Some Retirees

A shopper at a grocery store in San Francisco on May 2, 2022.

David Paul Morris | Bloomberg | beautiful pictures

Inflation is a growing concern as Americans spend more than hundreds per month. However, some retirees are able to avoid the price increase of gasoline, groceries, and other expenses.

Year-on-year inflation increased by 8.3% in Aprilhovers near a 40-year high, according to the US Department of Labor.

More than half of Americans expect rising costs to have “major negative impact” on long-term financial goalssuch as a comfortable retirement.

More from Personal Finance:
How to calculate your own personal inflation rate
How quickly does inflation cut purchasing power? A simple guide
What do consumers plan to cut if prices continue to rise?

But changes in spending during everyone’s golden years could blunt the impact of some of the added costs, according to JP Morgan’s. 2022 Retirement Guide.

“It’s under the headlines, explaining how purchases by retirees can change over time,” said Katherine Roy, chief retirement strategist at JP Morgan.

Although gasoline prices skyrocketed to another record high this weekOlder households tend to spend less on transportation than families aged 35 to 44, making them less vulnerable, the report found.

And some retirees have the flexibility to buy less gas by combining rides or carpooling, said Catherine Valega, a certified financial advisor at Green Bee Advisory in the greater Boston area for know.

“I don’t think we need to panic,” Valega added, explaining the price change could be an opportunity to rethink budgets and long-term planning.

While JP Morgan recommends using a separate line item for growing healthcare costs, with a growth rate of 6%, other spending categories could grow only 1.5% to 2% line-up. five, said Roy.

If you pull out of health care, retirees tend to spend less in real terms until age 80 on other categories, she said.

These findings are consistent with SmartAsset . Analytics found that retirement spending fell in 11 of the 14 core categories found in the US Bureau of Labor Statistics’ Consumer Spending Survey.

CFP Anthony Watson, founder and president of Thrive Retirement Specialists in Dearborn, Michigan, said: “While rising healthcare costs are a concern, it’s not enough to offset the drop in people’s spending. retirement for housing, food and transportation.

“For most people, other costs will come down over time,” he said.

For most people, other costs will decrease over time.

Anthony Watson

Founder and President of Thrive Retirement Specialists

Of course, rising costs can currently be hardest for the lowest-income households, which tend to experience higher rates of inflation, according to one working paper from the National Bureau of Economic Research.

However, it is important for retirees to have a long-term perspective when it comes to inflation, the JP Morgan report said.

“It’s just a moment and what’s important is the average,” said Watson.

Roy added: “Yes, we are experiencing high inflation. “But we’ve come out of a historic low for a long time.”

Source link


News7h: Update the world's latest breaking news online of the day, breaking news, politics, society today, international mainstream news .Updated news 24/7: Entertainment, the World everyday world. Hot news, images, video clips that are updated quickly and reliably

Related Articles

Back to top button