More retirees consider returning to work as high inflation squeezes
The average monthly Social Security payment in 2024 is $1,907
A growing number of retired Americans are considering returning to work as they continue to battle chronic inflation, according to a new survey published by the Motley Fool.
About 44% of respondents said they are thinking about looking for work because their Social Security benefits have not adequately kept pace with high inflation.
While Social Security recipients received a 3.2% cost-of-living adjustment in 2024, retirees say they are still struggling financially, the survey findings show. That is largely because the actual rate of inflation exceeded this year's 3.2% cost-of-living bump in March, April and May.
INFLATION IS UP 20% SINCE BIDEN TOOK OFFICE
"The higher inflation indicates that consumers are still experiencing an erosion in buying power," Mary Johnson, a retired Social Security and Medicare analyst, previously said.
More than six in 10 investors said their expectations for retirement have changed "significantly" in the last five years. (iStock / iStock)
The average monthly Social Security payment in 2024 is $1,907, according to the Social Security Administration. But that is just a fraction of the $4,818 that Americans age 65 and older reported spending in 2022.
Social Security is not intended to be an individual's sole source of income in retirement and, on average, replaces about 40% of a person's annual pre-retirement earnings. However, about 27% of Americans rely on it as their only source of income, according to the survey.
Consumers are grappling with a number of financial headwinds, including steep interest rates and ongoing inflation that has made the cost of just about everything from rent to gasoline to groceries more expensive.
While inflation has fallen considerably from a peak of 9.1% notched during June 2022, it remains well above the Federal Reserve's 2% goal. And when compared with January 2021, before the inflation crisis began, prices are up a stunning 20%.
As a result, about 61% of respondents reported struggling financially on a daily basis.
INFLATION INCREASES 3.4% IN APRIL AS PRICES REMAIN ELEVATED
The uncertain economic landscape has many Americans reconsidering whether retirement is a realistic goal.
A customer shops at a supermarket in Millbrae, California, on Aug. 10, 2022. (Li Jianguo/Xinhua via Getty Images / Getty Images)
More than one-quarter of all non-retired investors said they would likely be forced to return to the workforce at some point due to inadequate savings if they were to retire within the next 12 months, while 19% doubt that they will ever save up enough money to retire, according to a separate survey published by Nationwide.
An additional 19% said they will retire later than planned because of inflation.
High inflation has created severe financial pressures for most U.S. households, which are forced to pay more for everyday necessities like food and rent. Grocery prices are up more than 21% from the start of 2021, while shelter costs are up 18.37%, according to FOX Business calculations. Energy prices, meanwhile, are up 38.4%.
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Price hikes are particularly devastating for lower-income Americans because they tend to spend more of their already-stretched paycheck on necessities and therefore have less flexibility to save money.
The typical U.S. household needed to pay $227 more a month in March to purchase the same goods and services it did one year ago because of still-high inflation. Americans are paying on average $784 more each month compared with the same time two years ago and $1,069 more compared with three years ago.