There is no shortage of economic and social impacts attributable to the global COVID-19 coronavirus pandemic, but one that is beginning to have a demonstrable impact on American seniors is a recent surge in inflation in the United States. That surge largely comes from an ongoing supply chain shortage, as well as an unexpected level of demand for goods already experiencing pinched supply.
The impact of inflation on U.S. seniors is now starting to come into clearer view with the release of American Advisors Group (AAG)’s Modern Retirement Survey, polling over 1,500 individuals between the ages of 60 and 75.
Among the findings presented by the lender, inflation is a major concern of 66% of respondents who have expressed concern over the quality of their retirements. That rate jumps to 72% when focusing on the responses of widowed or divorced senior women. A similar — though not quite as pronounced — trend is observed in relation to the cost of living in retirement, with 53% of respondents saying that living costs in retirement are higher than they had planned for. That number rises to 61% for widowed or divorced senior women.
“Many seniors in this country are discovering that their retirement plans aren’t working out as they had hoped, and inflation is only making that reality worse,” said AAG Chief Marketing Officer Martin Lenoir in a statement accompanying the data. “With older Americans searching for ways to afford the cost of living and increase their cash flow, it’s no surprise that so many are turning towards reverse mortgages. With housing prices at a historic high, seniors across the country are tapping into their home equity and using the funds to create a comfortable retirement.”
Recent U.S. Department of Housing and Urban Development (HUD) and Federal Housing Administration (FHA) data indicates that much of the improved performance of the reverse mortgage business in 2021 came from higher levels of home price appreciation and lower interest rates. According to National Reverse Mortgage Lenders Association (NRMLA) data released earlier this year, seniors are collectively sitting on over $10 trillion in home equity.
Feelings the respondents have regarding their general financial stability during the inflation surge also recorded elevated levels of concern among the polled seniors, with 36% of respondents saying they have less money in retirement than they thought they would by this point in life. Again, that figure increases when focusing on widowed or divorced senior women, a cohort responding the same way in 44% of cases, 8% higher than the respondents overall.
Less than one-third of respondents (29%) also believe that they will outlive their financial resources, a sign of the generally-higher cost of living that seniors are experiencing on a fixed income during the inflation surge. Additionally, nearly 40% of respondents report a feeling that they need additional cash in order to stabilize their retirements to satisfaction.
The Modern Retirement Survey was conducted by AAG in early December, 2021, with 1,580 respondents. The questioning format included yes-or-no, ranked-preference and multiple-choice queries. See the results of the full survey.
