It would be difficult to have not noticed the increases in prices over the past year. From gas and travel to pet food, clothing, and home basics, prices have increased in amounts that are not insignificant. Perhaps the most shocking new price tags these days can be found at the supermarket. And it doesn’t stop there; many are experiencing raises in rent and other home expenses that have the potential to price them out of their current living situation and standard of living.
The record-setting inflation of the pandemic is a problem for just about everyone in the United States currently, but it does not affect everyone equally. For senior citizens and people with disabilities, the current economic environment is especially difficult to navigate. These two groups of people often live on incomes that are fixed by governmental agencies like the Social Security Administration which dole out Social Security and disability benefits to retirees and those unable to work. Living on a fixed income in economic times as turbulent as these where increases are swift and unforgiving is a very precarious situation to be in. Inflation hits people on fixed incomes—seniors and people with disabilities—the hardest. Why do fixed incomes lend themselves to making individuals vulnerable to inflation instability? What can those on fixed incomes expect from the future?
Sources of fixed income
For retirees and seniors over the age of 65, typical sources of income include Social Security benefits, a pension, an individual’s own retirement savings, or a mixture of all. In either case, the monthly amounts from social security and pensions are fixed, and in the case of a private retirement account, pulling more out now just means there’s less down the road. In other words, it’s still a fixed and limited resource.
For those with disabilities under the age of 65, disability benefits come in two main forms: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). SSDI is available to people who worked but are now unable to due to disability. Its payments vary based on the income prior to disability averaging $1,128 per month and maxing out at $3,148, according to the National Council on Aging. SSI is available to low-income, disabled Americans regardless of their work history and pays an average of $515 per month and a maximum of $794 per month for a single adult.
Fixed incomes and inflation pricing
For people who live on income sources like this, a random price increase here and there would likely not be difficult to absorb, but when everything increases across the board, there are simply fewer margins of adjustment available to absorb universal increases. Increases in rent are especially troublesome as a rent increase on a fixed income can eat up nearly all of an individual’s discretionary income. In the pre-pandemic era, the average rent for an individual in 2020 was $1098 a month. As of January 2022, one source puts the median rent for a one-bedroom at about $1400 nationwide while rent.com puts it closer to $1700. The pre-pandemic numbers were already a squeeze for many living on a fixed SSDI income, but the 2022 numbers just aren’t sustainable. For people living on $1100-2000 a month, and that’s an allowance on the high side given SSDI payouts, $1400-1700 rent is just not feasible; that’s nearly all of one’s income, leaving no room for food, medical, travel, and home expenses. Even in the state with the lowest median 2022 rent, West Virginia at $725 a month, living off $1100 a month is just untenable.
Experts predict that rent prices will see a further increase in 2022 of up to 10%, pricing even more individuals on fixed incomes out of their current living situation. And when this happens, finding new accommodations at a comfortable price point is virtually impossible as most other rental agencies have raised their prices as well. This can leave many on fixed incomes without housing and facing a dire situation.
And if an individual is lucky enough to have a rent-controlled or stabilized-living situation, the price increases in food, gas, and incidentals are still enough to put the squeeze on fixed budgets. Groceries are on average 6.4% more expensive than they were this time last year with price increases for some items going well beyond 6.4%. Granted, some individuals are lucky enough to receive SNAP benefits, but that too is a fixed amount, an amount that just doesn’t go as far with universal price increases.
Why this problem is unique to those on fixed incomes
For lower-income people who are still active in the workforce, the unique circumstances of the pandemic have provided opportunities for some to prove their essentiality and negotiate their way into better pay, better benefits, and better jobs. These types of people can likely absorb inflated pricing a bit better, but for those out of the workforce due to age or disability, there’s no negotiating up to better pay. Their financial circumstances largely remain unchanged even as those in the workforce advance.
What the future holds
After typical surges in inflation, things like gas prices and food prices tend to level out and eventually dip back closer to original levels, but rent prices do not function in this way. Generally speaking, once rent gets raised, the price increase is just a given and remains permanent. Though the inflation in the post-pandemic era is somewhat unique historically, there’s no reason to believe that the housing market will react any differently once all the dust settles. The probability that most pricing will level out is great news for those on fixed incomes, but the possibility that exorbitant housing prices are here to stay is a hard pill to swallow.
There is some good news that would partially address the increases in housing costs people on fixed incomes are facing. Each year SSDI, SSI, and SS retirement benefits are adjusted for inflation. A typical year sees about 2% increases in inflation, and benefits payments reflect that amount. But 2021 was no ordinary year, and the inflation boost from 2021 affecting 2022 payments will be 5.9%.
The bad news is that the adjustment is only made once a year at the beginning of the year, meaning that throughout 2021 in the depths of the worst price increases, people on fixed incomes were forced to live on incomes that reflected 2020 pricing. During that time, people still lost their homes and were forced to make impossible decisions about which necessities they could not live without. For those with retirement or savings accounts, those were depleted, leaving them less money to live on as they age.
Beyond fixed incomes
A shortage of affordable housing due to constantly rising housing prices amid unimaginable wage stagnation already forces many of the millennial and Gen Z generations to stay in their family homes for many years into adulthood. For younger folks with disabilities, being able to afford to move out of the family home is even more daunting. Young people with disabilities might be capable of living independently but also may only be able to get part-time or low-paying work due to their disability. For those who hoped to save to move away from family homes and live independently, the inflation of 2021 put any plans to do so on hold as what might have been savings for the future became necessary food and gas money for the present.
The bottom line
For people of all ages with disabilities, the bottom line on inflation is that the price surges of 2021 were a huge blow to their ability to live independently and with dignity. Higher prices might sting for just about everybody, but for people with disabilities, it threatens their very existence and their ability to live the lives that feel most comfortable and authentic to them.
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