Prices are going up and Americans are already feeling the effects of higher food, property taxes and energy prices that are having a direct impact on their pocketbooks and the psyche. These rising costs and the fixed incomes of retirees are on collision course given the current trajectory of price increases. Regardless of technology prices staying the same as processing power increases, a concerned citizen recently quipped that “I can’t eat an Ipad” during an economic discussion in New York.
Not only are are the costs of living rising rapidly but housing options are becoming increasingly more expensive for seniors through higher rents, higher property taxes and increased utility costs. Whether independent living at home or at a senior living facility, cost increases will threaten decisions as the effects of inflation compound on pricing increases. Besides inflationary pressures, the lack of supply and increasing demand will exacerbate cost increases creating challenges for retirement planning.
How will inflation show up in senior housing? Assuming a 10% growth in property taxes, home maintenance, heating and air conditioning, food, gas and other household expenses every five years, assets will be depleted faster or retirees will need to find a way to supplement their incomes, most likely through part-time work. Notice how the list does not address healthcare expenses?
Part-time employment for retirees will increase and will become competition for traditional demographics of part-time workers. Cost of Living Adjustments (COLA) cannot keep up with inflation in any scenario given the fiscal issues associated with the federal and state budget problems and investment returns cannot keep pace with inflationary trends.
The solution? It will be time to go back to work….but are employers ready for a rise in part-time, senior workers coming back into the job market?