Lately, just about everything is costing Todd Richardson more than it did before the pandemic.
He’s paying $2 more per pound of chicken wings, his cable and electricity bills have also gone up by $100 since before the coronavirus pandemic, and he’s anticipating that his landlord will raise his rent from $750 to $1,100.
But that’s not even the biggest shock to him.
“I can’t believe cat litter and food have gone up by $5. How could they even do that? It’s kitty litter and cat food for God’s sake,” he said.
‘Before the pandemic, I could survive.’
— Todd Richardson
Richardson, 56, is only able to save $110 each month, if he’s lucky.
Richardson used to work as a home-care aide for elderly people, but after contracting Lyme disease three years ago, which left him partially immobilized and with permanent neurological damage, he was forced to quit.
He receives around $1,500 a month in Social Security Disability Insurance benefits — half of which goes toward paying rent for his one-bedroom apartment in Plymouth, N.H. He spends the rest on transportation, cat supplies, electricity, cable and food, after he exhausts $200 a month in food stamps.
Richardson lives with his girlfriend, who also relies on Social Security Disability Insurance, and two cats. “Before the pandemic, I could survive,” Richardson told MarketWatch. He found small ways to save money, such as buying 99-cents-per-pound chicken wings at Walmart
and visiting a local food pantry. Those same wings now cost $2 more per pound.
Richardson’s situation is hardly unique — Americans across the board are paying more for goods and services than they have in more than a decade due to inflation.
But those price increases will hit some harder than others. That includes Richardson and 70 million other Social Security beneficiaries, who will feel the effects of rising inflation in their daily lives more acutely than those who don’t rely on Social Security income, experts told MarketWatch.
Retirees and Americans with disabilities who rely on Social Security benefits and don’t have pensions or other sources of income are poorly situated for the current inflationary environment, said Joel Eskovitz, a senior policy advisor at the AARP Public Policy Institute.
“They often have a lot of fixed expenditures,” he said, and when prices go up they cannot easily substitute more expensive items with cheaper products. “You cannot substitute blood pressure medicine for cholesterol medicine,” he said.
But retirees and disabled Americans should have more flexibility when it comes to shopping for food, Eskovitz said.
Over the past year, Americans have been paid 0.7% more for the food they consume at home than the prior year
Americans are currently paying 0.7% more than they did a year ago for the food they eat at home, according to data from the Bureau of Labor Statistics Consumer Price Index. Fruits and vegetables have seen the highest price increases (2.9%) of all food categories over the past 12 months.
The Social Security Administration makes a cost-of-living adjustment (COLA) each year that affects the size of beneficiaries’ checks, and the Consumer Price Index data is one of the factors that goes into that calculation.
But the agency doesn’t announce the adjustment until October and the change ultimately doesn’t go into effect until the start of the new year. This year’s COLA increased Social Security benefits by 1.3%. The Senior Citizens League, an advocacy group that represents seniors, is anticipating a COLA increase of 5.3% for the upcoming year.
‘As prices continue to go up, Social Security recipients will bear that cost without any inflation adjustment’
— Joel Eskovitz, a senior policy advisor at the AARP Public Policy Institute.
But until then, “as prices continue to go up, Social Security recipients will bear that cost without any inflation adjustment,” said Eskovitz, who previously served as deputy staff director and chief counsel at the U.S. Senate Special Committee on Aging.
In other words, Americans like Richardson are forced to live off income levels based on 2020’s cost of living. In normal times, that wouldn’t be an issue.
For the past decade, annual inflation has hovered around 2%, which is exactly the level the Federal Reserve traditionally seeks to maintain. As of May, the annual rate of inflation was 5%, a 13-year high.
Federal Reserve Chairman Jerome Powell has said he isn’t worried about inflation spiraling out of control.
He argues that the rise in inflation is being triggered by heightened demand for goods like lumber and rental cars, as well as supply-chain disruptions, mainly due to the global microchip shortage.
Ultimately, he believes inflation will come down naturally as more Americans return to living the way they were before the pandemic and supply-chain disruptions are corrected.
Whether or not that proves to be the case doesn’t help Americans like Richardson, who still need to make ends meet with money that cannot stretch as far as it used to.
“I’m going to go broke,” he said.