Current sky-high inflation rates have older Americans afraid their money won't last as long as their retirement.
Just over a third (36%) of people between the ages of 60 and 75 say they have less money than they thought they would at this point in their lives, and 29% believe they will outlive their retirement funds, according to a recent survey from the American Advisors Group. Polled in December, the 1,580 survey respondents reported feeling especially concerned about their post-career finances amid rising prices, with 66% saying they're worried inflation will negatively impact their retirement.
“Many seniors in this country are discovering that their retirement plans aren’t working out as they had hoped, and inflation is only making that reality worse,” Martin Lenoir, the group's chief marketing officer, said in a news release accompanying the survey.
The country's retirement crisis is ballooning, with health care costs rising, safety nets like Social Security facing uncertain futures and people generally living longer than ever. Now, prices are increasing for everything from groceries to cars to rent. Overall, inflation is at a 40-year high, with consumer prices surging 7.5% in January compared to a year earlier.
It makes sense that those in or nearing retirement would be particularly anxious about their finances, especially as more than half of the survey respondents indicated that the cost of living is higher than they expected.
Older people are also requiring more money than they have for their retirements. The survey found that 37% of older Americans say they need to increase their monthly cashflow in order to live comfortably. For context, Americans age 65 and older spend an average of $48,106 per year — including $6,719 on health care — according to recent data from the Bureau of Labor Statistics.
How to inflation-proof your retirement
The amount of money you need to save for retirement differs from person to person based on several factors, including when you want to retire and what you want your retirement lifestyle to look like.
If you want to have a lifestyle in your retirement that looks like the one you have during your career, Fidelity suggests trying to save 10 times your income by the time you’re 67. That means saving one year's salary by the time you're 30, three times your salary by age 40, six times your salary by age 50 and eight times your salary by age 60.
Of course, rising prices may have you second thinking whether the amount you've saving is actually enough. If you're planning to retire soon, experts say you should invest properly. Ensure you have the right mix of bonds in your portfolio, and that you’re diversified into other areas like commodities and real estate investment trusts (REITs), depending on your needs. You can check out Money's story on five ways to protect your investment portfolio from rising prices.
Experts also suggest you budget for higher costs.
“Have enough money set aside that's liquid that you will be able to meet emergencies or necessary expenditures even when there is an inflationary period going on,” Mary Johnson, a Social Security and Medicare policy analyst at The Senior Citizens League, previously told Money.