What risks do retirees and retirees face from inflation, and how do they react? – Center for Retirement Research

Reported The key findings are:

  • Higher inflation hurts older households, but the size of the effects varies due to three factors:
    1. The extent to which income and assets keep up with rising prices.
    2. The amount of fixed-rate debt, which decreases in real terms as inflation increases. And
    3. The extent to which households respond.
  • In the absence of any response, retirees are harmed more than near-retirees because, outside of Social Security, their incomes are lower relative to prices and their debt is lower.
  • Among responding households, new data show many tap assets and reduce savings, meaning more consumption today but less tomorrow.

The Center for Retirement Research at Boston College gratefully acknowledges Jackson National Life Insurance Company for supporting this research.

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