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February 16, 2022 at 03:40 PM
What You Need to Know
- Inflation is eating away at retirement savings, the Senior Citizens League found.
- Almost 60% of retirees the advocacy group surveyed said their savings had dropped more than 10% in 2021.
- Although the cost of medical services didn't rise as much as other costs, they still rose, said Mary Johnson of the SCL.
The January consumer price index increase of 6% reported in February shows the continuing stickiness of inflation, a factor that is hurting retiree savings, according to a new survey by The Senior Citizens League.
In 2021, consumer prices for all items rose 7%, the largest yearly change since 1981, according to the Bureau of Labor Statistics. The agency reported that food prices increased 6.3%, “a larger percentage increase than the 12-month increase of 3.9 percent in 2020.”
But the biggest spikes were in gasoline (up 49.6%), used cars and trucks (37.3%), and energy overall (29.3%), goods that normally don’t affect retirees as much.
And while certain portfolios might have fared well in 2021 — the S&P 500 was up almost 27% — for many retirees, it wasn’t a good year, the League found in a January survey of 1,131 of those who had retirement savings.
In its survey, the advocacy group for older adults wondered how retirees’ savings fared while inflation soared in 2021.
The findings were:
- 57% reported that their retirement savings were down by more than 10%.
- 10% reported that their retirement savings were down by less than 10%.
- 16% reported that their retirement savings had increased by more than 10%.
- 6% reported that their retirement savings had increased, but by less than 10%.
- 11% reported that their retirement savings stayed about the same as they were on Dec. 31, 2020.
Inflation Impact
In analyzing these returns, Mary Johnson, Social Security and Medicare policy analyst for the League, pointed out that due to inflation, “retirees may have dug deeper into their retirement savings than they ever planned,” she told ThinkAdvisor in an email. “While medical goods and services grew at a slower rate of inflation, they still rose.”
