A shopper in a San Francisco grocery store on May 2, 2022.
David Paul Morris | Bloomberg | Getty Images
Inflation is a growing concern as Americans spend hundreds more every month. But some retirees could avoid rising prices for gasoline, groceries and other costs.
Annual inflation increased 8.3% in Aprilhovering near a 40-year high, according to the United States Department of Labor.
More than half of Americans expect escalating spending to have a “large negative impact” on long-term financial goalshow to retire comfortably.
But spending changes during people’s golden years can lessen the impact of some rising costs, according to JP Morgan 2022 Guide to retirement.
“It’s going below the title,” said Katherine Roy, chief retirement strategist at JP Morgan, explaining how the basket of retirement assets could change over time.
Although gasoline prices have gone up another record this weekAccording to the report, older families tend to spend less on transportation than families between the ages of 35 and 44, making them less vulnerable.
And some retirees may have the flexibility to buy less gas by combining trips or sharing trips, said certified financial planner Catherine Valega, wealth advisor at Green Bee Advisory in the Boston metropolitan area.
“I don’t think we need to panic,” Valega added, explaining how price changes can be an opportunity to review budgets and long-term plans.
While JP Morgan suggests using a separate entry for the rise in the cost of health care, with a growth rate of 6%, other categories of spending can only swell from 1.5% to 2% per year. Roy said.
If health care is withdrawn, retirees tend to spend less in real terms until the age of 80 on other categories, he said.
These results are in line with a Smart resource analysis which shows declines in pension spending in 11 of the top 14 categories found in the US Bureau of Labor Statistics Consumer Spending Survey.
While the rising cost of healthcare is a concern, it’s not enough to offset the decline in retirees’ spending on housing, food and transportation, said CFP Anthony Watson, founder and president of Thrive Retirement Specialists in Dearborn, USA. Michigan.
“For most people, these other expenses go down over time,” he said.
Of course, rising costs may currently be more difficult for lower-income households, who tend to experience higher inflation rates, according to one. worksheet of the National Economic Research Office.
However, it’s important for retirees to have a long-term perspective when it comes to inflation, JP Morgan’s report argues.
“It’s just a point in time and what matters is the average,” Watson said.
“Yes, we are experiencing high inflation right now,” added Roy. “But we have come out of a historically low period for a long time.”