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Investing Specialists

Where Retirees Are Feeling Inflation

Meat prices, cable bills, and medical costs are taking a bite out of budgets, say retirees.

Food prices. Cable bills. Medical insurance. These are some areas our retired readers say they've felt the bite of inflation.

Although the Fed cited a tame overall inflation rate in its decision not to raise rates on Sept. 17, we know that broad inflation measures such as the Consumer Price Index don't always tell the whole story. We recently asked our readers who are in retirement where they have seen the most inflation since they retired, and where they thought inflation has been relatively benign.

The responses were wide and varied. Some readers with children and grandchildren in college referred to the "unexplainable inflation in college expenses." Other respondents said their property taxes had spiked in recent years. Dining, travel, and entertainment costs were also areas that retirees said they've felt the pinch, along with services of all kinds, from lawn care to auto maintenance to appliance repair.

Excerpted below are some frequently mentioned rising costs. To read the full thread and weigh in yourself, please click here.

"I got sticker shock yesterday when looking for ground beef and eggs."
Many readers (such as pkcrafter, quoted above) noted that the costs of food (and particularly meat) had noticeably increased. 

I have forgotten what steak tastes like, and now a whole chicken is $1.19 a pound!" said DUMBLARS. "I pick on meat only because that seems to be the one item that has the worst inflation-adder year after year.… I just won't eat as much meat (that is what I am supposed to do anyway I guess) but I won't enjoy it, and I will still claim inflation is a long way from tame."

"As others have noted food prices have increased. Especially beef and eggs, but produce also," said RetiredCB.

"It seems to me that the price of beef has doubled in the past two years. Ground beef used to be $1.99/lb and is now $3.99/lb. One porterhouse for the grill is well over $14," said doctorWu, who added: "Not that it matters, as health motivations have us cooking leaner meats."

Other readers pointed out that the costs of household goods have increased, and even when they've stayed the same, packages seem to be smaller or lighter. 

As Smiley100 explains: "Manufacturers decrease the size for the same price. Consider toilet paper: The rolls got smaller for the same price and they 'rolled-out' the mega rolls. Then the mega rolls got shorter (I have data--photographs). This size management is a well-documented technique. It affects everything from toilet paper to ice cream, breakfast cereals, coffee, etc."

Michaelb agrees that there are "lots of items in smaller packages or higher prices for the same quantity." 

Rayy737 added: "Even when it's not obvious ($/lb increase), there are reductions in package size, like a formerly 1 lb. bag of potato chips weighing in at 8.5 oz. They keep the bag size relatively big, to confuse the buyer. Probably a good idea to invest in packaging stocks."

"Cable, fuggeddaboudit. Time to actually look at alternatives."
The above quote, which comes to us from cgajowski, sums up a view that a lot of respondents echoed: Cable television prices have risen so noticeably that many retirees have started looking elsewhere.

"My cable bill goes up EVERY year, with some services rising 10%-15%!!" agreed Smiley100.

Bnorthrop actually listed cable as a lower cost, but only because this reader has cut the cord: "I dropped it and still have an overabundance of content from other sources."

"Entertainment of all sorts have gone up. Cable TV is outrageous and cell phone plans too (although I could argue that isn't entertainment). Movies have gone up, as have local Broadway-style performances," said RetiredCB.

"Insurances, all insurances."
Many respondents (such as lionsgate, quoted above) mentioned that rising insurance costs have taken a toll on their budgets, be it homeowners or automotive insurance. Medical insurance in particular was frequently cited as a rising cost, along with the costs of medical services.

"Just got the semiannual automobile insurance premium. It went up 19% even though the vehicle is older and there have been no accidents and so forth. This follows an increase of almost 10% in my homeowner's insurance," said newhandle.

"Home insurance keeps going up followed by food and city water. Not much more has risen too quickly," said MartyFL.

"Health insurance inflation has been bad over the last five years. It started at $265/month and is now at $707/month for the same high-deductible coverage. OK, I'm five years older as well, but almost tripling? I go on Medicare in a few days. Back to about $265/month. Whew!" said DouglasJohnson.

Hoodee agrees, adding: "I retired in 2001, when energy prices really took off. Didn't drive much but heating the house was expensive. More recently, I really feel food inflation. Of course, through it all the king of inflation is healthcare costs."

"Although my former company provides insurance, the premium they pay was capped years ago," said RetiredCB. "Therefore any increases in the premium is paid by retirees directly. Have seen my share go from $230/month/person to $300/month/person this year. Expect these increases to continue until I am Medicare eligible." 

"While my wife's copay to see my doctor is still $25, and has been for almost all my retirement years, the cost of insurance to fund her copay has gone from $499/month to $1199/month," said doctorWu. "Some of that is from steadily moving up the risk chart as we age every year, but a lot must be inflation. She turns 65 in 2016, and Medical Part B is only $105/month. We'll see what the prescription insurance will be in a few weeks. Probably less than $200/month, so the total will be far less than $1199."

"I cannot argue against low CPI inflation data."
Conversely, there were many readers, such as WOODJ, quoted above, who said they hadn't personally felt the effects of inflation in terms of overall expenses. For some respondents, such as The 62 Dawg, this is also a result of actively managing expenses: "If [prices] go up, I substitute or do without."

"In CA here, no significant inflation. Real estate tax (too) low because of Prop 13 … gas is cheap, reasonable HMO (Kaiser) health care, food is cheap and local ethnic restaurants very cheap. Someday we will be looking back at these as 'the good old days,' " said yakers.

"I agree--no inflation," said bubbygator. "If it weren't for gifting money to my grandkids, I wouldn't even have to be in the market."

"I've tried hard to find the good and the bad inflation since my wife and I retired in 2008. But changes in the CPI-U pretty closely mirror changes in our expenses the past five years," notes Grinder12. This reader, who has tracked household expenses for over two decades, cites some examples of how costs have decreased or stayed the same: "Our real inflation-adjusted medical expenses (insurance + out of pocket) are 1% lower 12 months ended August compared to five years ago. Our combined dining out + groceries expense is also 1% lower, inflation adjusted, basically no change. Our housing costs would have increased more than inflation due to property tax increases but those increases so far have been completely offset by our senior citizen exemption kicking in."