‘It’s not the retirement I imagined.’ How retirees are getting hit by inflation

CNN Business spoke with several retirees about how they manage spending when prices rise. A common problem is dealing with the shock of sharp increases in food prices – especially meat, fruit and vegetables.

But of course, inflation affects far beyond supermarkets.These retirees are like this Said they were coping.

If it wasn’t for trucks from the local food bank that came to her apartment building every two weeks, Donna Lyons, a retiree in Fort Collins, Colorado, said she might not have enough food for the month.

“I’m very, very dependent [the food bank]. . . it’s a real blessing,” said Lyons, 67, who moved from Pennsylvania to Colorado in 2020 to be closer to her two children and grandchildren.

She now lives off her Social Security checks and pensions she earned from decades of secretarial and event security positions in the Pennsylvania education system.

But come September, her rent will increase by $200 a month – 14% more than what she’s paying now. Lyons estimates that by then, after paying rent, taxes, insurance, drugs and utilities, she will have just $150 a month left to cover groceries and bills.

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Given that her grocery bill for the most recent month was $187, she wasn’t sure how she would be able to live in an apartment because her savings were nearly depleted. She said she had been looking for cheaper housing in the area but had had no luck so far.

“I thought about selling everything and going back to Pennsylvania, but I didn’t want to leave my family,” Lyons said, adding that she had been in the hospital recently and didn’t know what she would do without her children in help during that time.

Her expectations for retirement are very different from her current reality. “I didn’t expect the financial stress to be this high. I really didn’t. I worked for 50 years. And I’m a single parent, so saving isn’t easy. I’m slowly surviving through them.”

Cut expenses, resume part-time work

Retired teacher Marissa Flynn, 73, lives in a resident-owned mobile home park In Morgan Hill, California, south of Silicon Valley. She ran her own electrolysis business for many years before starting her second career as a public school teacher. She receives a pension and half of her ex-husband’s Social Security.

Flynn thought she would be financially better off in retirement, but didn’t realize her Social Security benefits would be cut by about $400 a month because of her teacher’s pension.every time she gets a cost of living adjustment A larger portion was deducted from her Social Security benefits medical insuranceshe says.

It wasn’t easy to manage until the pandemic and inflation hit.but now She felt unprecedented pressure.

Her utility and gas costs skyrocketed In the past year.

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U.S. gasoline prices recently hit an average of $4.60 a gallon, highest on record. In April, the U.S. Bureau of Labor Statistics reported that energy prices, including electricity and natural gas typically used for home heating and cooling, up 30.3% Year by year.

As a result, Flynn says she uses less heat and air conditioning. She also drives less and even goes to see her daughter and grandson, who live 40 minutes away. “Before, I just got in the car and didn’t think about it.”

It’s also impossible to wash her car for $20 — and it’s hard for her to do it herself because of California’s water restrictions. She says she doesn’t go out to eat, has no internet and can’t afford the repairs her home needs.

To make ends meet, Flynn has two-and-a-half days a week of alternative teaching, something she did before the pandemic but has since recovered, albeit posing a greater health risk to her due to Covid.

She said she also received “meals on wheels” and occasionally went to a local senior center for free lunches.

“It’s not the retirement I envisioned. It’s frustrating. The government always talks about helping families with children. Middle-class seniors feel left out and invisible,” Flynn said.

Like Lyon, Flynn has considered moving to an area with a lower cost of living, but is unlikely to do so, as it would mean farther away from her daughters and grandchildren. “That would be sad for me.”

watch their financial buffer shrinks

Granted, not all retirees are struggling financially with inflation, but it’s still changing their behavior.

Richard and Peggy Thomas have seen their financial cushion start to thin due to rising prices.

Arkansas City, Kansas resident Richard Thomas, 73, is preparing for retirement while working at Boeing as a mechanic making parts for composite jet engines.This preparation paid off despite his lower-than-expected pension After the factory where he worked was acquired in 2005 He was forced to retire early, earlier than he expected.

Thomas said he fully owns his house and has no credit card debt. “After my house was paid off, I put in a lot of savings and my 401(k). When I retired, I was in pretty good financial shape. How far can your money go when you don’t owe anyone money , which is quite remarkable,” he said.

Between their Social Security checks, pensions and the annuities they bought, Thomas said he and his wife Peggy could cover all of their monthly expenses and leave some. But that surplus is shrinking.

Because of inflation, “the padding of the financial ‘buffer’ I’ve worked so hard to build is starting to thin,” Thomas said. “It forces us to make some changes.”

Although the couple was never keen on travel, They travel less now. They also drive less — and more slowly — to save gas. That means less spontaneous driving to Wichita an hour away or eating out in a small town 30 miles away, he said.

A plan to buy a new car has also been proposed. “A new Jeep starts at $15,000 more than my house costs,” jokes Thomas. (Technically, after adjusting for inflation, the new Jeep still costs less than the 1997 purchase price Thomas said he paid for his house, but not much less.)

While Thomas said he wanted Social Security’s annual cost-of-living adjustments to be more in line with the real price increases he saw, he acknowledged that the couple’s frugality and financial planning were helping him and his wife weather this inflation more easily than others. ‘s chapter.

“Inflation hasn’t been a huge burden so far, but it’s getting more troublesome,” Thomas said.

better than most, but still cutting

Kan Tanaka, 60, and her husband Greg Chick, 67, retired a year ago and are enjoying their free time after years of working 12-hour-a-day psychiatry and plumber respectively.

Tanaka said the couple, who live in Tehachapi, Calif., paid off their mortgage early in their careers. She added that once those issues were resolved, they would put 40 per cent of their income into superannuation. Therefore, they are well prepared financially.

Jane Tanaka and her husband, Greg Chick, are cooking and traveling less because of inflation and falling stocks.

But given rising prices and a sluggish stock market, Tanaka said they are now opting to live on $2,000 less a month than originally planned, and only get their income from her husband’s Social Security benefits and annuity. “We don’t tap our retirement savings because we don’t want to sell our investments at a loss.”

Instead, they do a lot of home cooking instead of buying prepared meals or eating out. Her husband is taking care of the property around their home. She is mending their clothes. Due to gas prices, travel plans have been curtailed, even for road trips in their RV. Instead of donating to a favorite cause as they used to, they are donating their time. “Now I’m baking all day for a dog rescue club [fundraiser]”Tanaka said.

She knows all too well that the financial choices they’re making now are “first world types of delayed gratification choices,” as she puts it. “We could have more serious problems.”

But Tanaka said she hopes her story will encourage young people to save while working to fund their future. “It’s about preparing for a rainy day…and trying to adapt.”