True Costs of High Inflation for New Retirees

0
572
True Costs of High Inflation for New Retirees

True Costs of High Inflation for New Retirees

Those working individuals who’ve been looking forward to retirement for years now might be X’ing off the days on the calendar until that final workday arrives.

However, for those new retirees aged 62 and older, retirement might come with a financial shock when they realize there’s not enough money saved up to live on, especially in these days of rising inflation and spiking gas prices.

In this case, a retiree has two choices. Either maintain one’s present employment status, or look for a new job.

If both scenarios seem unappealing, there is another option for making up for lost and or diminished savings. It’s called a reverse mortgage.

If a homeowner has retained a family home for decades and has been keeping up with the monthly mortgage payments, a reverse mortgage will allow the said homeowner to tap into all the equity that’s been built up.

Something that can potentially run in the hundreds or even millions of dollars, depending upon the size of the home and where it’s located.

Proceeds can either be taken in one lump sum payment or monthly disbursements.

The advantage of a reverse mortgage is evident not only in its financial windfall, but the homeowner never needs to pay another mortgage payment for as long as he or she lives.

Seniors considering this option should learn how a reverse mortgage works before taking the next steps.

But what about those folks who don’t own a home or reside in an apartment? What effect will today’s high inflation have on their retirement?

According to a new business report by KSL.com, inflation in the U.S. “is entirely out of control.” The report also states that there are no signs of it slowing down anytime soon, which means inflation could plague the U.S. through all of 2022 and perhaps beyond.

What this means is, for those who were planning on retiring this year or next, the timing is not good.

Currently, the U.S. is realizing its highest inflation rate since 1982. Prices of automobiles, housing, rent, energy, and even basic foods like milk and bread, are hitting poor and middle-class families the hardest.

READ:   5 Reasons to Invest in Israel

Inflation doesn’t end there, or so the report attests. Prices of TVs, furniture, and appliances have spiked to levels that were unimaginable just one year ago.

Even the cost of traveling is skyrocketing. Airfare, car rentals, hotel rooms, and eating at restaurants, are all far more expensive than at any other time in recent history.

The report states that while no one will be exempt from losing considerable purchasing power, retirees will be hit harder than even poor, working families.

Retirement’s “Silent Killer”

A recent CNBC report attests that nearly 80 percent of retirees say that their major concern right now is high inflation. This makes sense since those who are living on a fixed income are experiencing a significant reduction in purchasing power.

Since retirees will be paying more for gas, food, and medications, they must make budgetary sacrifices elsewhere. Some of the hardest-hit retirees will have to make a choice between purchasing food or medication.

Financial experts are officially sounding the alarm that the U.S. inflation situation might be worse than some economists predicted. Economist, Peter Schiff, thinks that if the government was still using the formula that is used in 1982, inflation would be higher in 2021 than it was then.

Schiff suggests that at present, inflation doesn’t take into account energy and food prices, making the most recent inflation rate of 7.9 percent a false reading.

Says financial planner Peter Doyle on the Anthony Pompliano Podcast, The Best Business Show, the true rate of inflation is more like 15 to 20 percent.

Recession Fears

Some financial experts claim the U.S. is teetering on a financial cliff. One false move and we fall into a deep recession. According to Larry Summers, former Secretary of the U.S. Treasury, the fear is that the U.S. is reaching the point where it will be almost impossible to reduce the rate of inflation without giving rise to a recession.

Part of the blame for inflation has been placed squarely on the shoulders of Russian President Vladimir Putin and his war with Ukraine. But spiking inflation began one year ago at the height of the COVID-19 pandemic and the supply chain issues that accompanied it.

READ:   Tips to get the best home builders - 7 Best Tiрs you should know

Even if the inflation rate were to return to two and three percent, it would still have a negative impact on a retiree’s savings.

MarketWatch points out that a three percent inflation rate would significantly erode your purchasing power over time.

In other words, if one budgets $5,000 per month to live on, in ten years that number would be diminished to $3,720 per month, MarketWatch adds. This is a clear indicator of just how financially destructive the state of today’s 15 percent inflation rate is, not only for new and existing retirees but for all hard-working Americans.

 

Fact Check

We strive to provide the latest valuable information for pet lovers with accuracy and fairness. If you would like to add to this post or advertise with us, don’t hesitate to reach us. If you see something that doesn’t look right, contact us!

 

 

Reference:  Thedogdigest.com

LEAVE A REPLY

Please enter your comment!
Please enter your name here

3 × one =