How Inflation is Impacting Seniors

Americans must face the hard reality that the value of the dollar will be worth less in the future than it is today. The primary concern for retirees is how inflation impacts future purchasing power, especially in the healthcare industry as well as food, gas and home energy prices.

It is not just rising prices, but also the actual money that retirees stand to lose that cause financial anxiety among the elderly. LIMRA Secure Retirement conducted research that shows if inflation increases to 3%, the average retiree stands to lose $117,000.

What Can Seniors Do to Minimize the Impact of Inflation?

1. Reduce housing costs. Downsizing can help lower housing payments, energy costs and save on taxes and insurance.

2. Talk to a financial advisor about risk assessment. While seniors typically stick with low-risk investments, it may help to bump up the risk to attempt to outpace the inflation. A financial advisor can run the scenarios and provide a helpful strategy.

3. Create a budget. Many seniors tend to upgrade their lifestyle during retirement. Most retirees spend more than they did before they retired. This may be due to more free time which is why establishing a budget and sticking to it is especially important during these difficult economic times.

Not only does inflation affect the elderly by decreasing their purchase power, forcing them to live on a more realistic budget and increasing the amount that must be pulled from retirement assets, it also has a big impact on their quality of life and mental health. Worrying about having enough money can cause many seniors to experience symptoms of anxiety and depression. Younger generations may also worry, but they also know they still have earning power. Once you lose earning power, you are truly dependent on government benefits and the money saved from earlier years.

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