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Despite the drop in gasoline prices, inflation remained higher than expected in August, limiting optimism over falling daily costs. But some retirees won’t feel the sting of rising costs, experts say.
Annual inflation increased by 8.3% in Augustdriven by rising costs of food, shelter and medical care, the U.S. Department of Labor reported on Tuesday.
Inflation has pushed A quarter of Americans delay retirement, a recent survey from BMO Harris Bank found. But changes in spending during everyone’s golden years could blunt the impact of some of the added costs, according to JP Morgan Asset Management’s 2022 Retirement Guide.
“It’s under the headlines, explaining how retirees’ purchases can change over time,” said Katherine Roy, head of retirement strategy at JP Morgan.
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Older Americans may spend less overall
While JP Morgan recommends using a separate line item for growing healthcare costs, with a growth rate of 6%, other spending categories could grow by only 1.5% to 2% line-up. five, said Roy.
If you pull out of health care, retirees tend to spend less in real terms until age 80 on other categories, she said.
These findings are consistent with SmartAsset analysis found that retirement spending fell in 11 of the 14 core categories found in the US Bureau of Labor Statistics’ Consumer Spending Survey.
For example, although higher price at pump In June, older households typically spent less on transportation than families aged 35 to 44, making them less vulnerable, the report found.
And some retirees have the flexibility to buy less gas by combining rides or carpooling, said Catherine Valega, a certified financial advisor at Green Bee Advisory in the greater Boston area for know.
“I don’t think we need to panic,” Valega said, explaining the price change could be an opportunity to rethink budgets and long-term plans.
Retiree’s expenses typically decrease over time
CFP Anthony Watson, founder and president of Thrive Retirement Specialists in Dearborn, Michigan, said that while soaring healthcare costs are a concern, it’s not enough to offset the drop in spending. retirees for housing, food and transportation.
“For most people, other costs will come down over time,” he said.
For most people, those other costs will decrease over time.
Anthony Watson
Founder and President of Thrive Retirement Specialists
Of course, rising costs may currently be hardest for lower-income households, which tend to suffer from higher rates of inflation, according to one work paper from the National Bureau of Economic Research.
However, it is important for retirees to have a long-term perspective when it comes to inflation, the JP Morgan report suggests.
“It’s just a moment and what’s important is the average,” said Watson.
Roy added: “Yes, we are experiencing high inflation. “But we’ve come out of a historic low for a long time.”
