CNN — American seniors face many difficult choices. After the Federal Reserve’s latest rate hike, the combination of rising prices for everything from food to gas to utilities and ever-higher borrowing costs is making the finances of fixed-income Americans increasingly precarious.
“Overall they have an increase in day-to-day expenses due to the current economy,” said Ella Thomas, executive director of Thea Bowman Center, a Cleveland community center that provides food assistance and other services. “It’s definitely a problem.”
Thomas said many of the seniors the center serves who own their own homes are at risk of falling behind on property taxes and often don’t have enough money for crucial repairs and maintenance. “Being able to maintain these homes is a struggle for most of them,” she said.
That’s how Catherine Powell, a longtime Clevelander, said she found herself back in the workforce at the age of 62, taking a part-time job at the center to help others. seniors to apply for benefits such as the Supplemental Nutrition Assistance Program (SNAP).
“When you’re younger, you can afford to get things fixed,” Powell told CNN Business. “When you’re younger, you can go out and have two or three jobs, you can hustle… But when you’re a senior, it’s hard to pivot.”
Powell quit a federal government job 17 years ago to be a full-time caregiver for sick family members. “I took early retirement because my family members started to age…I didn’t want to put anyone in a nursing home,” she said. “Unfortunately, I haven’t made any long-term plans.”
The financial reality is that people can’t afford to retire on just a monthly Social Security check, said Vivian Nava-Schellinger, director of partnerships and network activation at the National Council on Aging. “Social Security is missing at least $1,000 [a month] in many places. That’s a lot of money for an older person,” she said.
But many older Americans, especially low-income people, people of color and women — who are more likely to work less or not at all to take on unpaid caregiving roles — have no other sources. reliable income in their later years.
According to data from job site Indeed, the percentage of previously retired workers joining the workforce has increased over the past year. Most of this increase is due to people between the ages of 55 and 64, said Nick Bunker, director of economic research at Indeed.
Health problems compound economic pain
Workers sidelined by illness or injury do not even have the opportunity to outstrip inflation by increasing their incomes. Poor health undermines the ability to hold down a job, especially as people age, but if they can’t afford to eat well and get the medical care they need, their health will deteriorate further. which will reduce the likelihood that they will be able to recover physically or financially.
“You can…link health outcomes and financial outcomes because they are completely linked in so many ways,” said Emily Allen, acting president and senior vice president of programs at the AARP Foundation.
John Harriger, a resident of Chilhowie, Va., suffered a crippling back injury in 1994 and relies solely on Social Security for his income.
Harriger, 66, said he considers himself lucky to live in a mortgage-free family home, although paying taxes, utilities and insurance is difficult. More expensive gasoline means he rarely goes out now, except for physiotherapy appointments and church services.
“Just a few months ago I had to file for bankruptcy,” Harriger said. “I get about $1,800 a month [from Social Security] but… when the gas and groceries started to increase, I couldn’t take it anymore. We used our credit cards to buy our gas and our food.”
Harriger, who is eligible for SNAP, said his benefits were recently increased — to $23 a month. “We had to change our meal plans a lot…I miss my steak and burgers for sure,” he said. On the menu now: sparse green bean and cornbread dinners.
“I like a good pot of beans with lard, but damn lard is that high,” he said.
No margin of error
Seniors on fixed incomes have to “completely recalibrate what they thought their lives were going to be like” in retirement, Allen said.
“What we hear directly is a lot of times individuals saying, ‘Well, I thought I was managing my finances well,’ but then there’s this financial shock…and they’re struggling,” she said. declared.
Debbie Sites, a 73-year-old widow who was forced to give up a nursing career due to a neurological disorder and suffers from celiac disease, said she was watching both inflation and the latest the Federal Reserve’s attempt to tame it with a super interest rate hike this week with a sense of alarm.
Sites, who depends entirely on Social Security for her income, said she was worried about what would happen when the mortgage on her home near Asheville, North Carolina, was reset. “I have an adjustable rate mortgage that’s going up in 2024, and it’s pretty scary,” she said. Although she currently pays less than 4%, she said the terms of the loan allow her to reach 9% over the course of a few years.
Social Security increases won’t be enough
Social Security recipients are on track to get a historically high cost of living adjustment, or COLA, next year. The Senior Citizens League projects an 8.7% increase, which would equate to an additional $144.10 on the average monthly benefit.
But the increase will be too small, too late for struggling seniors, advocates warn.
“Social Security’s inflation adjustment is retrospective,” said Alicia Munnell, director of Boston College’s Center for Retirement Research. “When inflation rises, it takes a while for COLA to recover.”
Worse, recent stock market gains have faded as investors brace for an economic slowdown, Munnell said. “There have been huge gains in 2020 and 2021, and in some ways that takes away from those gains.”
And of course, millions of people don’t even have the financial cushion that a pension plan provides, Munnell pointed out. “This whole 401(k) system works great for the top third of workers,” but leaves millions behind, she said.
Data from the US Census Bureau revealed that in 2020, more than 40% of Americans between the ages of 56 and 64 did not have a retirement account. The numbers are even lower for women and non-whites: 56.5% of working-age women do not have a retirement account, as do 63.2% of working-age black Americans and 71, 7% of Hispanic Americans of working age.
This has a pass-through effect on the financial security of older Americans. Another Census Bureau report found that while the number of people living in poverty as defined by the Supplemental Poverty Measure fell between 2020 and 2021, the number of people over the age of 65 living in poverty rose. from 9.5% to 10.7%.
“Compared to other wealthy countries, poverty rates among older people are higher,” said Beth Truesdale, a researcher who studies work and aging at the WE Upjohn Institute for Employment Research. “The reason current inflation is so high for so many older people is because so many older people are already living on very little.”
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