Tuesday, June 11, 2024

Inflation and the elderly: Most retired Americans will die broke

Here’s a scary statistic: the average pre-tax income of retired Americans is about $55,000, and most of that income goes to housing, transportation, healthcare, and food.

Most retired Americans live on a fixed income that will not go up. Their living expenses, however, are rising at an alarming rate. Food costs have gone up almost 20 percent over the past four years. Homeowners insurance has seen double-digit increases in some places. Car insurance prices have risen astronomically in recent years--more than 20 percent just over the last year.

None of these costs will go down in my lifetime. For example, the rising cost of home insurance is driven by catastrophic weather events like hurricanes and wildfires. Auto insurance prices reflect the higher cost of buying and repairing cars and abusive tort litigation. Those trends are irreversible.

Most Americans cut back on expenses when they retire by moving to areas with lower living costs and downsizing their homes.
Moneywise suggests that retired Americans sell their cars and buy bicycles. They should also order big portions at restaurants and take the leftovers home for a second meal. They should also quit buying their groceries at Whole Foods.

Of course, retired people have already implemented those strategies, but the fact remains that living costs are going up dramatically and show no sign of ever retreating.

Our government believes that America has plenty of money. We’ve got cash to put illegal immigrants in four-star hotels. We’ve got money to give jets to Ukraine. We’ve got money to send ammunition to Israel. Rich people have enough disposable income to shower political candidates with wads of cash and can even afford special bathrooms for their pets. Retired Americans have no cash reserves for such projects.

As a kid, I remember visiting my grandparents in Harper County, Oklahoma, and riding horseback by the county's poor farm. That’s where the elderly went in rural Oklahoma when they were dead broke. I visited Harper County recently, and the poor farm is closed. Even the building is gone.

Very shortly, America will have to decide whether to shift national resources to elderly people so they can live in dignity or reopen the poor farms and continue financing the wars in Europe and the Middle East. My guess is that our political leaders will pursue war rather than shift our priorities to the welfare of struggling Americans.

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