A shopper at a grocery store in San Francisco on May 2, 2022.
David Paul Morris | Bloomberg | Getty Images
Inflation is a growing problem as Americans spend hundreds more every month. But some retirees can avoid the sting of price hikes on gas, groceries and other expenses.
Annual inflation rose 8.3% in April, near a 40-year high, according to the US Department of Labor.
More than half of Americans expect that increasing spending will have a “large negative impact” on long-term financial goals, such as: B. a comfortable retirement.
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But spending changes during people’s golden years can lessen the impact of some rising costs, according to JP Morgan’s 2022 Guide to Retirement.
“This is making headlines,” said Katherine Roy, chief retirement strategist at JP Morgan, explaining how retirees’ shopping baskets may change over time.
Although gasoline prices hit another record high this week, older households tend to spend less on transport than families aged 35 to 44, making them less vulnerable, the report says.
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 Greater Boston-area Green Bee Advisory.
“I don’t think we need to panic,” Valega added, explaining that price changes could be an opportunity to reconsider budgets and long-term plans.
While JP Morgan is proposing to use a separate item for rising healthcare costs, which are growing at a 6% rate, other spending categories could only inflate by 1.5% to 2% annually, Roy said.
When you stop health care, retirees tend to spend less on other categories by the age of 80, she said.
These results are consistent with a SmartAsset analysis showing declines in retirement spending in 11 of the 14 core categories found in the US Bureau of Labor Statistics consumer spending survey.
While rising health care costs are a concern, they’re 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, Michigan.
“For the majority of people, those other expenses go down over time,” he said.
Of course, rising costs right now could hit the lowest-income households, which tend to experience higher rates of inflation, hardest, according to a 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, the JP Morgan report claims.
“It’s just a timing and what counts is the average,” said Watson.
“Yes, we are experiencing high inflation right now,” Roy added. “But we’ve come a really long way out of a historically low period.”