Inflation Robs Us All
 

Inflation is rough on retired seniors on fix income everywhere.
Coping with the high cost of gas, cars, food, and many
other products, what's your plan on fighting inflation?

Do you drive less?
Do you eat out less?
Do you socialize more with friends at home?
Did you cancel travel plans this year?

Just curious on how you're dealing with 2022 so far.

Cheers !

Really haven't changed anything. The big cost saver for us we do not travel any more.
I don't like to cook any more so we are still eating out frequently.

We have been eating out more often but not traveling so saving lots on driving and travel.

The people hurt most by inflation and low interest rates are those with substantial savings and invested assets. Not only is your purchasing power affected, but your entire portfolio loses value. At least in the 1970's and 1980's, you got a decent return on fixed income investments, like money market accounts and CDs. I hope that interest rates will soon increase to correct this situation. Currently, savers are being severely punished.

Anyone check out the interest in I-bonds?
Interest is paid by inflation rates and is now at 7.12%.

The problem is that you can only invest $10K per year in I-Bonds.

If you have a $100K treasury bond earning 2 percent and the inflation rate is 8 percent, you are losing $6K per year without spending any money eating out or travelling.

Qyld. Pays 1 percent a month. Writes covered calls on Microsoft, Apple etc. even if you lost 10 percent on principle you still earned 2 percent for the year

OP asked "what's your plan?"
I plan to vote!

40 percent of my portfolio is in stocks, 60 percent in bonds and cash. Are you suggesting that retirees should put all of their retirement funds in stocks to keep up with inflation?

A absurd inference. It’s part of a portfolio, bonds are a loser going forward. Anything that lets you sleep at night works

I agree that bonds are a loser without higher interest rates. But, I wouldn't feel comfortable with a higher percentage in stocks. That is the point. Where do you put the non-stock portion of your portfolio to minimize the impact of inflation? Inflation is the topic of this thread.

It’s a yield alternative greater than rate of inflation with principle appreciation if the market goes up. The call premium reduces risk in the event of a decline. You have to decide the portion. There are other etf like it. Doesn’t have a lot of volatility. I see it as a bond substitute with better upside

Still plenty of disposable income we’ll be fine. Yes, we’ve experienced increase in prices, not catastrophic to our living standards.

Very well said

You cannot fight inflation any more than you can fight gravity. Seniors on a fixed income. That is true of most of us. We all received a raise in social security some with pensions will receive or may received a cost of living increase.

REALITY, the CPI consumer price index is now roughly 10%. You pay that with after tax money. To be even, I need to make roughly 15% on investments. I've done pretty well for the year it is less than half what I need to be EVEN.

Most posts are complaints. We do not drive anywhere near what I used to do when I was working. We do have a mortgage and I could pay it off but the rate is below current market and I am still getting more on borrowed money than my cost to borrow it.

Imagine a family of four. living pay check to pay check. Driving to work on gasoline now over $4.00 a gallon with a mortgage. The average American has, I read somewhere $10,000 in savings.

Lucky? It seems good luck come to those who WORK HARD and SAVE HARD.

We've been told to eat lentils. Background they are the beans highest in protein. Hum, we just went on our grocery run. A pound of lentils was a dollar. It is now a dollar and eighty-nine cents. I make a great lentil soup. Sadly true. There is or used to be a website with recipes from the 1930 depression.

Remembering when bread cost a dime....
Movies were 10-20 cents....
Gas 10 to 99 cents....
etc....
Having survived to 2022.....
No problem!

There is no shortage of not only different OPINIONS but people in different financial situations. Our current situation the CPI consumer price index is now running roughly 10%. We all pay that after taxes.
To be even I need to make roughly 13% on my savings. This year I've done less than half of that. Bonds and cash surely will not yield 13%. Any interest on bonds or cash is taxed at your highest tax rate. Average age in the villages is 70. Assuming some, many people have an IRA, 403B or whatever other codes there are will be forced to take required minimum distributions at 71. That is taxed at your highest tax rate. It is the wrong place to hold dividend paying stocks. As in a taxable account dividends are taxed at a lower rate than your highest tax rate.

The old thought 60% stock 40% bonds or the other way around 60% bonds 40 % stocks were valid in the OLD DAYS. Treasuries now are paying like 2% inflation is now 10%. Long history Treasuries would pay the rate of inflation plus 2% so people would build a bond ladder and be even. Far from what it is today.

Since you are flooding the airways with "just curious" subjects please post them where they belong - The Villages, Florida. non villages discussion.

What is the difference all of these posts are found in this one section anyway?

Because interest rates are so low I have been putting an increasing percentage of our portfolio in what I call defensive mutual funds.

Most of this is in value and dividend growth funds that are conservative in nature but have done rather well over the past 10 years.

Remember the days when our country and its residents weren’t hopelessly dependent on unsustainable debt levels. Back then the Federal Reserve would use it’s available tools to guide interest rates to a level where responsible savers could earn a real rate of return owning US Treasury notes and bonds. A real rate of return was a yield above and beyond inflation. Both our country and its residents were typically fiscally responsible. Spending was limited to what could be afforded without taking on crazy levels of debt.

It makes me shake my head when I hear the Federal Reserve is now becoming hawkish on inflation. Since inflation has begun to run out of control, they have raised the Fed Funds rate by a minuscule 25 basis points, or one quarter of 1%. If the Fed really wanted to make a bold statement, and demonstrate seriousness about containing inflation, several rate increases of 1 - 2% each are necessary, but it can’t happen because it would effectively bankrupt both our country and many debt laden citizens. Last time inflation was this bad was in 1981. Paul Volcker was the chairman of the Fed back then and short term interest rates were jacked up to 20%, which quickly nipped inflation in the bud. We desperately need someone like Volcker overseeing our country’s monetary and fiscal policies now.

They are planning on numerous increases of 0.25% thru the rest of the year. Do believe they should increase rates faster.

I would say more but do not want to get into trouble.

No changes with any of our lifestyle. But I have a good financial guy, and plan for whatever

And I still don’t think is computer is fixed

Yet:duck:

Remember when made 5 dollars day. Remember when minimum was $1.15 hour. I don’t want to remember. :ohdear:

I travel less, I cook at home, I play Lotto

I-bonds
 

Yes. The base rate for I-bonds purchased this year is 0, but the current overall rate is 7.12%, which is reset every 6 months. You can purchase up to $5,000 per tax return per year using your tax refund and up to $10,000 per year per person via Treasury Direct. Plan to keep them at least 1 year and preferably 5 years or interest penalties apply (although after the first year it's not bad). We will be maxing out our I-bond purchases this year.

I've always been quite frugal, so not much change for me, except eating more peanuts and less nuts.

Two ways we are fighting inflation.
 

1. Keep working. We had planned for full retirement in January of 2021 using a projected rate of inflation double the rate of the previous 4 years. We figured that would give us a good cushion, After digesting the results of the 2020 election my wife is still working full time and since I retired a few years ago, I am taking on all the things that we would normally pay someone else to do. House cleaning, plumbing, yard work, painting, etc.

2. Voting for those who will move the country to not only to full energy independence, but becoming the world's top exporter of natural gas.

FYI-the more USA natural gas we export to China and India, the less green house gases will be produced. Why - more electricity will be produced using gas instead of coal. Compared with coal, gas puts 1/2 the amount of CO2 into the atmosphere per KW hour produced.

Average adult has less then $400 saved today.

We are in that category with huge capital gains in 2021 and then a dive in early 2022. We have a large estate but still don't like to see losses. We have never eaten out much except for during travel....too much food, slow service and not usually worth the cost and often not as good or healthy as our own cooking. We shop carefully for best deals on flights, hotels and cruises etc and will take several trips this year. We have always shopped carefully for food, watching expiration dates etc and we eat our left overs. We throw very little food away and keep snack food to a minimum. We try to combine errands to save gas and we bought a lithium golf cart. We took social security at 67 for 1 person and the second younger person filed under that as well allowing their account to grow a few more years for higher payments. Don't think that is allowed anymore though.

Everyone (except the top .1%) is on a fixed income.
:ohdear:

Travel abroad has been curtailed. We plan to visit national sites and stay closer to home for a while

Actually, if you ate less red meat and more beans, you would be richer and healthier. The Roman army conquered the world and did not eat meat, it was too expensive.

Nothing has changed for us. By the end of this year the supply, demand, and labor shortages is suppose to finally balance out. We didn’t get here overnight with issues Covid caused, and it takes time to get it all working again. I’m fine and cooking most meals at home….like I always have.

It’s rough on everyone - even single people and families who are trying to live in today’s society. Let’s try thinking of others in this time of need - especially those who are less fortunate. At least you can still go out to eat and you don’t have to struggle and find where your next meal is coming from. I don’t know - let’s try and think of others. Just my opinion.

Good for you.
Wife and I average one meal out once a month, like most villagers.....:1rotfl:

No change in anything we do, just burning through our money faster.

Doesn’t that mean that this year you just stay even?