What Risks Do Near Retirees and Retirees Face from Inflation, and How Do They React?

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The report’s key findings are:

  • High inflation tends to harm older households, but the size of the impact varies due to three factors:
    1. the extent to which income and assets keep up with rising prices;
    2. the amount of fixed-rate debt, which declines in real terms as inflation rises; and
    3. the extent to which households respond.
  • Absent any response, retirees are hurt more than near retirees as, outside of Social Security, their income is less indexed to prices and they hold less debt.
  • Among households that do respond, new data show that many tap assets and cut back on saving, which means more consumption today but less tomorrow.

The Center for Retirement Research at Boston College gratefully acknowledges Jackson National Life Insurance Company for supporting this research.