'Inflation is the silent killer,' as many retirees are feeling the sting

Getty ImagesKevin Linehan (68), a retired man from Fitchburg, Massachusetts, is concerned about rising inflation. Linehan, 44, suffered a heart attack and decided to retire early from the Postal Service in order to receive a reduced retirement income. He said, "It wasn’t the best financial decision to make." "But at that time, it seemed like I had more important things than my job." Linehan, a veteran of the Air Force, was able to secure housing through Veterans Affairs at a monthly cost of less than $500 per month, despite having a difficult time living on'skimmy income. Linehan's rent is relatively stable from year to year, but his income will determine how much he gets. Learn more about Personal FinanceHow to create an inflation strategy with muni bondsHow climate change impacts retirement portfoliosLinehan discovered a way to protect your portfolio against inflation. Linehan noticed an increase in the prices of essentials like gasoline and food over the past few months. Linehan has noticed an increase in the cost of staple groceries like bread and milk. He has also seen steady increases in gasoline prices which have limited his ability to travel. He said, "It's almost like we're finally getting over the pandemic." Linehan, who is eligible for monthly benefits through the Supplemental Nutrition Assistance program, also known as SNAP, has been especially affected by rising food prices. Although SNAP benefits grew during pandemics, Linehan expects them to fall to $16 per monthly once Covid-19 relief ends.He said, "I don’t know how long [the extra benefits] will last, but it’s helped me tremendously." According to the Labor Department, the May consumer price index (which measures the cost of food and fuel, as well as other goods) increased by 5% over the previous year. The Labor Department reports that food prices have risen by 2.2% in the last 12 months and gasoline prices have risen by 56.2% following pandemic dips. Although the Federal Reserve has said that these price increases will be temporary, Linehan and other retirees worry about rising prices.Inflation is the silent killer. Brad Lineberger, President of Seaside Wealth ManagementAccording to the Federal Reserve Bank of New York, Americans' expectations of year-ahead inflation rose to 4% in May. This is the seventh consecutive monthly rise, according to the report. Brad Lineberger, a certified financial planner, said that inflation is "the silent killer". He is president of Seaside Wealth Management, Carlsbad, California. It can cause a loss of purchasing power that can lead to people not being able to afford the lifestyle they used to enjoy.This is not a problem for all retireesWhile rising prices have alarm many retirees, some are not feeling the effects. Jon Ulin, CFP and CEO at Ulin & Co. stated that "our clients have not been greatly affected" by the inflation spikes. Wealth Management in Boca Raton (Florida). Al Sapienza (70) and Diane Benson (69), in Seattle, are two examples of retirees who have not felt the inflation sting. The couple, who had previously lived in Boston's suburbs, moved to Seattle in 2019 to be near their son, David, 40. Sapienza, who had been with the Social Security Administration for 25 years, decided to retire early and move on to higher education. He retired in 2015.Diane Benson and Al Sapienza Source: Diane BensonBenson decided to spend more time with her mother, who is ill, and quit her job as a social worker in 2007. She said that her loss of income was not an issue. Sapienza stated, "We have never stretched ourselves beyond what our budget allows." "In reality, we probably lived well under it." He said that while they noticed an increase in prices, inflation has not affected their finances "in any real way".Adjustments to the cost of livingFor those on a fixed income, inflation may prove difficult. Sapienza stated that Benson and Sapienza receive both payments from Social Security and a pension, as well as cost-of-living adjustments. Although Social Security payments have been relatively stable in the past, rising prices have caused estimates for the 2022 Social Security cost of living adjustment to rise to 5.3%. This is the largest increase since 2009, according The Senior Citizens League. "People will see prices rise this year and their benefits won't be increasing immediately to compensate," stated Alicia Munnell from Boston College's Center for Retirement Research.Sapienza and Benson also have untapped retirement funds. They plan to wait until 72 years of age to withdraw the funds. Retirees are less likely to use the so-called "three-legged stool" of retirement income pension, retirement funds and Social Security. According to the National Institute on Retirement Security, only 6.8% of Americans over 65 receive income from all three sources.How to combat inflationJeffrey Tomaneng is a CFP and wealth advisor at Asset Management Resources, Hyannis, Massachusetts. While many retirees might feel anxious about rising prices, there are ways you can minimize them. He suggests that clients review their portfolios and consider shifting a portion to more aggressive assets. Many clients have parents who are in their 90s now and are running low on savings. Tomaneng said that a little more portfolio risk would have helped their financial situation 20-30 years ago. Lineberger stated, "We remind our clients that they shouldn't be too conservative with their asset allocation because they need stocks in order to fight inflation."Reduce your expensesKevin P. Linehan Courtesy of Kevin P. Linehan