Inflation is here.
Here are two-ways older Americans are impacted
Chances are you’ve filled up your gas tank or gone grocery shopping in the last six months. If you have one thing is undeniable. The cost of energy, fuel, and food is rising…rapidly. A fact made all too real as it took $10 more to fill my tank than it did in January of this year here in northern California.
Since January many Americans have watched gasoline prices spike from a national average of $2.34 /gal to $2.94 /gal as of March 15, 2021. Those living in California (one of the largest markets for reverse mortgages) are paying an average of $3.50/gal and nearly four-dollars in the largest metros.
Then there’s food inflation. Supply chain disruptions and a rapid spike in oil prices have increased the cost of transporting or shipping all goods including food. Isaac Olvera, lead economist ArrowStream, a supply-chain technology firm for the food services industry sees food prices continuing to climb. In 2020 alone, food prices surged nearly 4%.
Among the biggest reasons for the rise in food costs last year, however, was the meatpacking plant disruptions caused by widespread COVID-19 outbreaks forcing facilities to close., Olvera says. “Packing plants were shuttered and beef, pork, and poultry production were stunted” Prices climbed further he says, as consumers flocked to grocery stores to buy up supplies.
Fear-driven purchasing wasn’t limited only to perishable items. In the early days of the pandemic, panicked shoppers began hoarding and bulk-purchasing toilet paper far beyond any reasonable need for their household. As a result, others were unable to find toilet paper for weeks, and when supplies returned prices were significantly higher.
There’s no denying the reality of inflation in the food and fuel sectors. Consumer goods may soon follow depending on how quickly the U.S. and world economy recover this spring and summer. In the meantime what are older Americans on a fixed income to do?
One short-term fix is the recent stimulus payouts. While Social Security and pension fund payouts are nearly static, the modest and infrequent payments to residents from the Treasury help soften the brunt of the increased cost of living. The question is, what happens once those payments cease? While many other nations have paid a modest UBI (universal basic income) since the pandemic lockdowns, Americans find themselves with little predictability wondering IF or WHEN the next stimulus payment will be made. Not surprising considering the political pandering, gaslighting, and broken promises made by both parties.
Despite this, one silver lining remains for the older homeowner. Equity conversion. Knowing inflation is certain to shorten one’s sustainable retirement withdrawals from retirement savings, securing a source of funds based on today’s record home values and historically low interest rates may be the most pragmatic way to purchase some peace of mind.
Regardless, the official arrival of inflation can no longer be denied.