Related topics: retirement, retirement planning, Social Security, pension, retirement savings
Imogene Goss likes to walk around a lake that is six or seven miles from her home in Kansas City, Mo. It's less hilly than her suburban neighborhood, with no cars to navigate around.
But when Goss, 80, a retired postmaster, calculated that driving to the lake was costing her $5 a week, she brought her exercise routine back home. With gas flirting with $4 per gallon, she also is careful to group her errands. "I have learned very careful driving habits in the last few years," she says.
Rising prices for food, gasoline and health care are hitting older Americans hard. The last cost-of-living increase for Social Security recipients and federal retirees was in 2009, and retirees on fixed incomes are seeking ways to economize as prices of essential goods rise while their incomes remain static.
"Seniors are finding it harder and harder to get by with just their retirements," said Melissa R. Tribelhorn, who works in Seattle for the nonprofit Senior Services, which connects older people with services ranging from transportation to legal aid. "We're seeing a pretty large influx of clients needing our services where a year ago they wouldn't have needed us."
Financial setbacks
Twenty-three percent of people 65 and older live in households that depend on Social Security for 90% or more of their income, according to a 2010 AARP report (.pdf file). About 26% more receive at least half of their family income from Social Security. Among women, 53% of those 65 and older depend on Social Security for more than half of their income.
An increase in the amount that retirees contribute toward Medicare premiums is likely to wipe out next year's Social Security cost-of-living increase for most recipients.
Retirees also are coping with investment losses and, in some areas, reductions of 50% or more in the value of their homes. That ends their plans to sell the big family home, buy a smaller retirement home and add the rest of the profit to retirement nest eggs. Some won't see the lost equity come back in their lifetimes.
While the standard advice to those who have lost retirement savings is to work longer, many older people who would like to work can't get jobs. The unemployment rate for men 62 and older rose from 3.3% in 2007 to 7.3% in 2010, according to research from the Urban Land Institute. The rate for women 62 and older rose to 6%, double the rate in 2007. Rather than working longer, some older people have been forced to retire early.
The cost of staying healthy
Although all Americans 65 or over are eligible for Medicare, all but the poorest pay a premium that comes out of their Social Security. Basic Medicare doesn't cover expenses such as dental care and prescription drugs, and policies that cover those gaps cost extra.
Bettye Guillory of Federal Way, Wash., near Seattle, has managed to live to 98 so far in relatively good health. To stay healthy, she spends $89.85 every other month on vitamins and supplements such as glucosamine for joint health. She can't afford those vitamins without help from her daughters, who are old enough to retire though both still work.
Guillory's sole income is $1,354 a month from Social Security. Of that, she pays $1,105 a month for room and board in an adult family home (Medicare pays the rest) and about $185 a month for health insurance. That leaves her less than $65 a month for other expenses.
"Everything goes up," she says. "The Social Security used to give me a little more every year."
With less than $65 a month to spend, she can't buy the fresh fruits and vegetables, real orange juice, green tea and organic eggs she'd like to have to supplement the food that's served at her retirement home.
"I'd like to have healthy food to eat," Guillory says. "They give you food that's not really all that healthy. . . . They use the eggs that come in boxes instead of real eggs."
