Inflation hitting local seniors, low-income families
Louise Bischoff prepares to play bingo Friday at Washington Senior Citizens Center. Like many senior citizens, she has struggled with rising prices. (Photo by Karen Mansfield)
Dr. Robert Dunn
Boatman
news@greenecountymessenger.com
Consumers have been paying more for gas, groceries, cars, and other goods for months.
But after the Federal Reserve raised interest rates by .75% in an attempt slow inflation, other areas will be impacted – among them, student loans, home and car loans, credit card rates, and savings accounts.
While rising inflation hurts everyone, low-income families and senior citizens on fixed incomes are most affected.
That’s because, for families living in poverty or on a fixed income, there isn’t much room to cut corners to save more money.
“Inflation is terrible for everybody, but some people can afford it. They don’t like it, but they can afford it. Seniors getting Social Security or low-income families, they have to make changes and that’s painful,” said certified financial planner Gary Boatman.
Rising costs of rent, utilities, and food can make it difficult or impossible for them to pay for their expenses.
Consider: the average family is paying about $350 a month more for everyday essentials than last year, noted Boatman.
Grocery prices have increased 10.8% since last year, with the greatest increase on meats. Gas has increased 43.8%, according to the latest consumer price index.
In a March survey conducted by The Senior Citizens League, half of respondents ages 55 and up said they have spent emergency savings in the past 12 months in response to high inflation.
Additionally, 47% have visited a food pantry or applied for the Supplemental Nutrition Assistance Program (SNAP).
Said Myra Hatfield, who lives in Bellmead Apartments in North Franklin Township, “I’m on a fixed income, and what I bring in goes right back out.
“You can’t go out and enjoy going to lunch or doing the things we used to do because we just don’t have the money to do it,” said Hatfield, on a recent trip to the Washington Senior Citizens Center. “I still drive, I can still go and do things, but with the price of gas right now, there’s no way in the world that I’m going out like I used to. That’s the way it’s affecting me – I just can’t get out and do the things I love to do. I’m happy and content, and I’m not complaining, but it has had an impact.”
Candace Tustin Webster, executive director of the Corner Cupboard Food Bank in Greene County, which serves about 700 homes each month, said the cost of groceries and availability of food and produce in stores has impacted the number of families coming to the pantry for food in 2022.
For older Americans who rely on Social Security payments, it’s even harder to make ends meet, Boatman said.
The average monthly benefit pays $1,657, which is a 5.9%, or $93 increase, from last year. But inflation has eaten into that cost of living adjustment, he noted.
Louise Bischoff said the past several months have been a struggle.
Bischoff, who lives in Bellmead Apartments, which provides low-income housing for seniors, said her monthly Social Security payment doesn’t stretch far.
“After I write my bills out, there’s really nothing left. I don’t have any savings because I don’t have $10 or $20 to set aside for savings,” said Bischoff. “I keep cutting and cutting and cutting. I still have a place to stay and food to eat, but I really have to watch it.”
She has switched from name brand food items to grocery store labels, and is considering cutting cable to further cut expenses.
Mortgages, car loans, and credit card debt all are about to get more expensive, too.
Dr. Robert Dunn, associate professor of economics at Washington & Jefferson College, explains why.
The federal funds rate is the interest rate at which banks borrow and lend to one another overnight.
“Many other lending rates are based off the fed funds, like mortgages or auto loans, so it has an impact throughout the economy,” said Dunn. “Essentially, they’re trying to slow down the economy by reducing consumer spending and increasing prices in general, making it more expensive to buy things like houses and cars, and buy items on credit cards increasing costs in other areas. The goal is to slow down purchasing and economic growth. When things are running this hot, they need to slow it down. But it’s a tough balance, and the fear is that you tip into a recession.”
Boatman recommends quickly paying off as much debt as possible on variable rate products – especially credit cards – and saving at least three to six months’ worth of cash for everyday purchases.
“Way too many people don’t pay their credit card in full, and get charged 18% to 20% interest, and if you miss a payment they hike it to 29%. Credit card debt is the worst kind of debt,” said Boatman.
Boatman noted, too, that the rate for a 30-year fixed-rate mortgage has doubled, from 3% this time last year to 6%, meaning more home buyers may be priced out of the housing market.
About half of buyers are putting off their plans to buy a home, choosing to wait for six to 12 months before restarting the process, according to a recent survey of 900 real estate agemts by real estate tech startup HomeLight.
“If you make a big purchase like a home, you have to make sure you can afford it,” said Boatman.
Dunn said consumers are noticing the price increase in goods and services they use regularly, like gas and groceries, but pointed out it’s those unforeseen expenses that can cause families to struggle.
“The unfortunate part about it is, if there’s something you need to buy and can’t avoid it, that’s when it becomes a challenge,” said Dunn. “A new car is already more expensive and challenging to get, but if your car breaks down and you absolutely need a new car, you’re going to be forced to make a purchase, and you’re going to pay more for it.”