Experts say inflation continues to rise, but some retirees will not bear the brunt of the many rising costs.
Annual inflation jumps 9.1% in Juneis growing at the fastest pace since late 1981, the US Department of Labor reported on Wednesday.
The high prices have worried many, even those earning six figures. Some 65% of Americans who make $100,000 or more are “very concerned” about inflation, According to CNBC survey,
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But according to JPMorgan, a change in spending in people’s golden years could lessen the impact of some rising costs. Guide to 2022 Retirement,
“It’s getting down to the title,” said Katherine Roy, chief retirement strategist at JPMorgan, explaining how the shopping cart of goods can change over time.
Older Americans spend less on key expenses
While JPMorgan suggests using a separate line item for rising health care costs, with a growth rate of 6%, other spending categories may only grow 1.5% to 2% annually, Roy said.
If you opt out of health care, retirees spend less in real terms by age 80 on other categories, she said.
This conclusion a. are aligned with smartasset analysis Retirement spending is showing reduction in 11 of the 14 main categories found in the US Bureau of Labor Statistics Consumer Expenditure Survey.
For example, despite higher price on pump The report finds that through June, older families typically spend less on transportation than families aged 35 to 44, making them less vulnerable.
And some retirees may have access to buying less gas by combining travel or shared rides, said certified financial planner Katherine Velega, a wealth advisor at Green Bee Advisory in the greater Boston area.
“I don’t think we need to panic,” Valega said, explaining how the price change could be a chance to revisit the budget and long-term plans.
Most retirees’ expenses generally decrease over time.
Although rising health care costs are a concern, it is not enough to offset the reduction in retirees’ spending on housing, food and transportation, said Anthony Watson, CFP, founder and president of Thrive Retirement Specialists in Dearborn, Michigan. Told.
“For most people, those other expenses subside over time,” he said.
For most people, those other expenses subside over time.
Anthony Watson
Founder and President of Thrive Retirement Specialists
Of course, rising costs can currently be hardest on the lowest-income households, who experience high inflation rates, according to one. working 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, argues the JPMorgan report.
“It’s just a matter of timing and what matters is the average,” Watson said.
“Yes, we are facing high inflation right now,” Roy said. “But we’ve come out of a historically low period for a really long time.”