Seniors under siege

By Robert Rogers

You don’t need to barrage Harry Mifflin with statistics to convince him that prices are sprinting past his pocketbook.

“You see the prices going up all around you,” said Harry Mifflin, a retired police officer, while scanning a sparse lunch hall at the Perris Hill Senior Center on Thursday. “The price of gas is keeping people away for lunch ... a loaf of bread is $3, it’s ridiculous.”

Mifflin is not alone in his common sense assessment that a panoply of economic forces have gathered into an inflationary storm, threatening to swamp fixed-income monthly checks of some seniors and dig into the nest eggs of others.

Gasoline prices are again flirting with $4 a gallon, leaving little chance that food prices will ease anytime soon, and the mood in world financial markets has turned cautious.

With a troubling combination of rising food prices, higher energy costs, larger health care bills, reduced interest on savings and stock market declines taking hold in 2008, seniors are finding incomes - whether from Social Security, pensions, savings or investments - is losing ground to inflation.

Food prices have come to rival gasoline in terms of both the outrage it stirs and the impact on seniors’ pocketbooks.

From 2006 to 2007, food prices rose by 4 percent - the highest annual increase since 1990, according to the U.S. Department of Agriculture.

And the run probably nowhere near over.

Food prices may end this year rising at an even higher clip as 3.5 percent to 4.5 percent as grocers’ bottom lines continue to face pressure from commodity and energy price increases.

At the same time, the real estate meltdown has cut into household wealth and put pressure on rental rates.
Foreclosures skyrocketed about 160 percent in San Bernardino and Riverside counties in the first quarter of 2008 compared to the year before, according to DataQuick Information Systems.

“In my senior complex, rents went up $86 this year,” said Nancy Wilson, a 70-year-old retired meat-packing plant worker who collects $1,330 annually in Social Security. “I rely in my Social Security, and I’m down to a monthly cushion of about $100.”

Wilson, like other seniors, has made tough changes in her routine to weather the economic conditions, including eating out less, driving less, and scimping on higher dollar items while focusing on lower cost bulk foods.

The economic conditions pose challenges not only to costs of living but also, for those seniors fortunate enough to have them, nest eggs of wealth.

“With increasing costs and fixed incomes, you’ve got a confluence of conditions that can be very difficult for seniors,” said Don Pelgrim, executive vice president and chief administrative officer at Vineyard Bank, National Association. “The biggest danger is that they find themselves in a panic situation and make rushed decisions. These are the times when you see get rich scams coming out of the woodwork.”

Pelgrim said seniors have a number of options amid an environment of rising inflation coupled with low-yield interest rates. While the stock market’s volatility can cut deeply into an investors principal over the short term, a number of principal-protecting banking strategies can be useful tools strategies in an unstable economy, Pelgrim said.

And banks are responding. Vineyard Bank has a senior education program that includes outreach at senior centers throughout the region and financial consultations at their offices.
But for the seniors who live check to check, inflation is pushing some to the brink.

A majority of the 48 million Americans aged 65 and over who receive a Social Security check depend on it for at least 50 percent of their total income, and one in three relies on it for 90 percent or more of their total income, according to The Senior Citizens League.

But with Social Security’s tepid cost of living adjustments - just 2.3 percent this year - trails rising costs in everything from Medicare to energy costs, seniors’ spending power is under siege.

“Living on Social Security alone, it’s tight,” said Pat Troy, 72, a retired small business owner. Troy, of San Bernardino, said she cashed out an IRA years ago to supplement her Social Security, which now stands at $1,074 per month.

Now she has grown astute about taking advantage of every public assistance program she can, from low-cost lunches at the Perris Hill Senior Center to subsidized utility and water bill programs.
“I take advantage of every little piece of help I can get,” she said.

The strains of food and energy costs have driven her to make different decisions at the grocery store, Troy said, decisions driven more by economics than nutrition.

“I’m buying less fresh fruits and produce because it’s so high,” she said. “I know it's good for me, but I have to cut back.”

Some seniors pointed to other factors contributing to their stressed economic circumstances. Proposition 13, the voter approved 1978 law that limits property tax increases for homeowners who owned their properties prior to that year, is a major cost-saver, but essentially locks some seniors into their homes. Buying and moving into another property would exposed them to a budget busting increase in their annual property taxes.

One solution, say most seniors, is to recalibrate Social Security cost of living increases to better reflect the reality in the marketplace, particularly the prices of necessities like food, energy and health care.

The most recent adjustments, for instance, increased the average monthly Social Security retirement benefit by $24, to $1,079, based on the consumer price index of the third quarter of 2007, a figure that doesn’t include energy, health and food costs.

While many of the seniors strapped for cash today have lived through more arduous periods before, including the Great Depression of the 1930s and hyper inflationary periods of the late 1970s and early 1980s, today has the familiar feeling of helplessness in the face of forces beyond their control.

“It’s scary,” Nancy Wilson said. “When the costs of oil and gas keep going up, everything else goes up too, except my check. It really makes me feel powerless."