To be sure Inflation does impact the marginalized segment of our communities in a disproportionate way. They truly feel the pain of trying to make ends meet and putting food on the table. Their paycheck on Friday determines when and what they will eat for the following week. Unless you have lived it, you cannot truly understand the stress this places you and your family under.
There is another demographic that I am addressing in this post. Those who, when looking at the complete economic picture, have profited beyond expectations. They have done so while at the same time describing how inflation has impacted them to score political points. Their attempt to claim the pain of inflation is disingenuous to those truly suffering.
My recent experience, at a social gathering with friends a few weeks back, is my own. Although, I can imagine it has played out at kitchen tables across the nation. It’s important to keep in mind, everyone at this lunch is doing quite well in retirement, and a few are doing very well.
Kinda funny, but not so much:
As guests arrived the conversation was fun and free flowing. Over lunch we shared pictures of our kids, grand kids, and family pets. Several of us compared stories about our foreign travels, others their new home purchases. As dessert was served inflation entered the conversation, possibly triggered by the bread in the bread putting. The question, “Have you seen the price of a loaf of bread?” came forth with a sense of urgency as is something new was just discovered. Others, not to be outdone, expressed changes they had to make on their grocery purchases, i.e. lower quality meats and even purchasing off brands (oh my!). I was very puzzled as to how a loaf of bread, whether $1.00 or $1.50, could impact this groups grocery shopping experience. It became obvious that this was an attempt to claim the pain of inflation as their own. Not once did the conversation mention those in the marginalized community who actually feel the pain of inflation. I found myself trapped in an echo chamber. The direction of the conversation set me back on my heels. My response was clumsy at best. I quickly blurted out, “How are your stocks doing? I think you will be ok”. (oops) This identified me as the odd man out. Shortly after, I found the front door and made use of it.
I decided to take a Side-eye look at the full picture. I realize, in today’s economy, my grocery bills have increased but so has my SSI and my investments.
I settled on a spread sheet as a visual to show how much pain my lunch group was/wasn’t under. Since we are all retired, I chose this demographic for my illustration.
To be clear, if SSI is your only income in retirement, inflation definitely has a significant impact on your finances. The COLA adjustments help but fall short. These are the ones that truly need relief from inflation.
I am looking at the retirees on the other end of the spectrum, aka: my lunch group.
The chart below deals only with the increase amounts due to inflation. Whether you own your home outright or have a mortgage, inflation does not impact the P&I. It does allow for the increase in homeowners insurance and taxes. I used the average expenses for the age group 65+.[1] I used $4,000 for a couple as a modest amount for the SSI. The Cola percentage adjustment amounts come from a .gov site.[2] For the investment returns I used the S&P 500 [3]
At the time of writing this, inflation is down, and the market continues to set high marks.
To summarize the purpose of this exercise:
I hope we can all agree that a politically motivated agenda from either party makes productive discourse impossible. Using sound bites as tool to attack one another only increases the divisiveness that plagues us.
Those of us with wealth can acknowledge the suffering of and have empathy for the marginalized members of our community, but we cannot truly grasp their suffering. That is OK, we are not expected too. It is also OK that we are fortunate to have prospered equally in both the previous and current administrations. Once we accept the reality of the whole economy, we can then have an honest discussion regarding inflation and the ones truly feeling its consequences.
[1] American Households’ Average Monthly Expenses | The Motley Fool