As high inflation continues to affect the U.S. economy, senior citizens are concerned that the high price levels will erode their retirement savings.
Global Atlantic Financial Group — a life insurance and annuity company — surveyed over 1,000 investors between the ages of 59 to 75 with more than $250,000 in assets. They found that 71% of respondents indicated that they believe rising inflation will negatively impact their retirement savings and 46% of those with fixed income investments worry that low interest rates will impact their retirement income.
“Those on the cusp of retirement are paying close attention to economic issues such as inflation and low interest rates, and they recognize that it might be a good time to revisit their retirement strategies,” Global Atlantic executive Paula Nelson said in a press release.
In September, year-over-year inflation surged to 5.4%. As a result, the Social Security Administration hiked the cost-of-living adjustment to 5.9% — a move meant to help 64 million Social Security recipients and 8 million Supplemental Security Income beneficiaries cope with higher price levels.
The adjustment is in line with rates witnessed early in the Carter administration — 5.9% in 1977 and 6.5% in 1978. After surging to 9.9% in 1979 and 14.3% in 1980, the adjustment declined once President Ronald Reagan and Federal Reserve Chair Paul Volcker implemented harsh measures to decrease and stabilize inflation.
Despite high levels of concern among retirees, White House Chief of Staff Ron Klain voiced agreement with the notion that high inflation is merely a “high-class problem.”
Jason Furman — former chair of the Obama administration’s Council of Economic Advisers — tweeted: “Most of the economic problems we’re facing (inflation, supply chains, etc.) are high-class problems. We wouldn’t have had them if the unemployment rate was still 10 percent. We would instead have had a much worse problem.” Klain retweeted the post with the caption, “This.”
Contrary to Klain and Furman’s argument, inflation diminishes wealth — especially for working-class Americans, who hold a greater share of their assets in cash than wealthier counterparts.
Federal data confirm that the average American’s real wage is on the decline due to inflation. For instance, the Bureau of Labor Statistics recently reported that “average hourly earnings” in the United States rose by 3.6% between June 2020 and June 2021. However, when factoring in inflation — specifically through the Consumer Price Index, which rose by 5.3% over the same period — “real average hourly earnings” diminished by 1.7%.
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