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CRR Reports on the Risks and Effects of Inflation on Near Retirees and Retirees
On June 4, 2024, the Center for Retirement Research (CRR) at Boston College released its issue brief, How Does Inflation Impact Near Retirees and Retirees? Typically, older households are negatively impacted by high inflation based on: 1) the extent that assets and income sustain increasing prices; 2) the amount of fixed-rate debt which decreases in real-terms while inflation increases; and 3) the extent of the responses of households to inflation.
Other key highlights include:
- Generally, older households are more affected by high inflation based on retirement status and wealth;
- Largely, retirees are more harmed by inflation than near retirees since their income is less indexed to prices (excluding Social Security benefits) and typically have less fixed-rate debt; and
- For both retirees and near retirees, those in higher-wealth households are more protected since they invest in assets that grow with inflation.
The brief is available here.