America’s seniors are facing a lot of hard choices. After the Federal Reserve’s latest rate hike, the combination of climbing prices on everything from food to gas to utilities and ever-higher borrowing costs is making the finances of Americans on fixed incomes increasingly precarious.
“Overall, they have an increase in daily living expenses because of the economy right now,” said Ella Thomas, executive director at the Thea Bowman Center, a Cleveland community center that provides food assistance and other services. “It’s definitely a problem.”
Thomas said many seniors the center serves who own their own homes are at risk of falling behind on property taxes and often don’t have enough money to perform crucial repairs and upkeep. “Being able to keep those homes up is a struggle for most of them,” she said.
This is how Catherine Powell, a lifelong Clevelander, said she came to find herself back in the workforce at the age of 62, taking a part-time job at the center helping other seniors apply for benefits such as the Supplemental Nutrition Assistance Program (SNAP).
“When you’re younger, you can afford to get things fixed,” Powell told CNN Business. “When you’re younger, you can go out and get two or three jobs, you can hustle… But when you’re a senior, it’s tough to pivot.”
Powell left a federal government job 17 years ago to be a full-time caregiver for ailing family members. “I took an early retirement because the people in my family started to get old… I didn’t want to put anybody into a nursing home,” she said. “Unfortunately, I didn’t make plans for the long haul.”
The financial reality is that people can’t afford to retire on just a monthly Social Security check, said Vivian Nava-Schellinger, director of partnerships and network activation at the National Council on Aging. “Social Security comes up short by at least $1,000 [a month] in many locations. That’s a lot of money for an older adult,” she pointed out.
But many older Americans, especially lower-income, people of color and women — who are more likely to work less or not at all in order to take on unpaid caregiving roles — have no other dependable sources of income in their later years.
According to data from jobs site Indeed, the percentage of previously retired workers rejoining the labor force has climbed over the past year. Most of that increase has been driven by people in the 55-to-64-year age group, said Nick Bunker, Indeed’s director of economic research.
Workers sidelined by illness or injury don’t even have the opportunity to keep ahead of inflation by increasing their income. Poor health saps the ability to stay employed, particularly as people age, but if they can’t afford to eat well and get the medical care they need, their health will decline further, reducing the likelihood that they will be able to recover physically or financially.
“You can… connect health outcomes and financial outcomes, because they are completely linked in so many ways,” said Emily Allen, interim president and senior vice president of programs at the AARP Foundation.
John Harriger, a resident of Chilhowie, Virginia, suffered a disabling back injury in 1994 and relies solely on Social Security for income.
Harriger, 66, said he counts himself lucky that he lives in a family home with no mortgage, although paying for taxes, utilities and insurance is a struggle. More expensive gas means that he rarely goes out anymore except to physical therapy appointments and church services.
“Just a couple months ago, I had to file bankruptcy,” Harriger said. “I get about $1,800 a month [from Social Security] but… when gas and groceries started going up, I couldn’t make it any more. We were using our credit cards to buy our gas and our food.”
Harriger, who is eligible for SNAP, said his benefits were recently increased — to $23 a month. “We’ve had to switch our meal plans a lot… I miss my steak and burgers, that’s for sure,” he said. On the menu now: Sparse dinners of green beans and cornbread.
“I like a good pot of beans with fatback, but gosh, fatback’s high, too,” he said.
Older adults on fixed incomes must “completely recalibrate what they thought their lives were going to look like” in retirement, said Allen.
“What we’re hearing directly is often individuals saying, ‘Gee, I thought I was managing my finances OK,’ but then there’s this financial shock… and they’re struggling,” she said.
Debbie Sites, a 73-year-old widow, who was forced to give up a nursing career because of a neurological disorder and suffers from celiac disease, said she is watching both inflation and the Federal Reserve’s most recent attempt to tame it with a super-sized interest rate hike this week with a sense of alarm.
Sites, who relies wholly on Social Security for her income, said she worries what will happen when the mortgage on her home near Asheville, North Carolina, resets. “I have an adjustable rate mortgage that goes up in 2024, and that’s pretty scary,” she said. Although she is paying a rate below 4% now, she said the loan terms allow for it to rise to as high as 9% over the course of a few years.
Social Security recipients are on track to get a historically high cost of living adjustment, or COLA, next year. The Senior Citizens League projects an 8.7% increase, which would equal an additional $144.10 on the average monthly benefit.
But the increase will be too little, too late for struggling seniors, advocates warn.
“Social Security’s inflation adjustment is backwards-looking,” said Alicia Munnell, director of the Center for Retirement Research at Boston College. “As inflation picks up, it takes a while for the COLA to pick up.”
Making matters worse, recent stock market gains have withered on the vine as investors brace for an economic downturn, Munnell said. “There were enormous gains in 2020 and 2021, and in some ways, this is taking away those gains.”
And of course, millions of people don’t even have the financial cushion a retirement plan provides, Munnell pointed out. “This whole 401(k) system works very well for the top third of workers,” but leaves millions behind, she said.
US Census Bureau data found that as of 2020, more than 40% of Americans between the ages of 56 and 64 don’t have any retirement accounts. The figures are even lower for women and non-whites: 56.5% of working-age women don’t have a retirement account, nor do 63.2% of Black working-age Americans and 71.7% of Hispanic working-age Americans.
This has a pass-through effect on the financial security of older Americans. Another Census Bureau report found that while the number of people living in poverty as defined by the Supplemental Poverty Measure fell between 2020 and 2021, the number of people over the age of 65 living in poverty rose from 9.5% to 10.7%
“Compared to other rich nations, poverty rates among older adults are higher,” said Beth Truesdale, a research fellow who studies work and aging at the W.E. Upjohn Institute for Employment Research. “The reason that the current inflation pinches so hard for so many older adults is so many older adults are already living on very little.”
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