Food stamps, credit card debt: High inflation forces older Americans to make tough financial choices
For many older Americans, record high prices are jeopardizing their financial security just as they approach or live in retirement, according to a recent survey from The Senior Citizens League, a nonpartisan senior group.
The online survey was conducted online in the first quarter and included 3,056 participants, 96% of whom rely on Social Security as a source of income.
Seniors are spending savings, taking on debt
Half of respondents ages 55 and up have spent emergency savings in the past 12 months in response to high inflation, the survey found.
Meanwhile, 47% have visited a food pantry or applied for Supplemental Nutrition Assistance Program, or SNAP, benefits. Moreover, 43% have carried debt on a consumer credit card for more than 90 days.
Among the other common steps survey respondents had taken include applying for assistance with home heating or cooling costs, depleting a retirement or savings account, drawing down more retirement savings than usual or applying for a Medicare Savings Program or Medicare Extra Help for help with medical or prescription drug costs.
Interest rates on credit cards are poised to go up after the Federal Reserve on Wednesday raised interest rates by 0.75 percentage points, the biggest hike in 28 years. That may not help older Americans who have taken on more debt to cope with higher prices.
“When people are facing this type of inflation, those who have lower savings tend to be the ones who have to take on more debt to get the bills paid during the month,” said Mary Johnson, Social Security and Medicare policy analyst at The Senior Citizens League.
Social Security, Medicare changes may provide relief
Social Security beneficiaries saw the biggest boost to their benefits in about 40 years in 2022, with a 5.9% cost-of-living adjustment.
The Senior Citizens League has estimated next year’s COLA could be 8.6%, based on the latest Consumer Price Index data.
How high Medicare Part B premiums are for 2023 will also make a difference for beneficiaries who are watching their wallets. This year, the standard monthly premium is $170.10, a 14.5% increase from the previous year prompted in large part by the potential cost of covering Alzheimer’s drug Aduhelm.
However, the cost of the Alzheimer’s treatment has since been cut in half, prompting government officials to indicate they may adjust Medicare Part B premium increases next year to compensate.
One way older Americans may try to cope with higher prices may be to keep working, according to Johnson.
A recent retirement survey from Schroders found 69% of working Americans plan to continue to do so in retirement. The top reason was to cover basic living expenses, with 56% of respondents; followed by the desire to stay busy, 51%; and to keep active and in good health, 49%.