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How post-pandemic inflation could impact retirement | Money Smart

With prices higher than normal, an Elizabethtown College economics professor weighs in on what retirees and those nearing retirement should know.

PENNSYLVANIA, USA — As things slowly get back to normal, we've seen an increase in prices for everything from lumber to food. For those nearing retirement, or already retired, how can they ensure they remain in budget on a set income? 

Americans are shelling out more money for items post-pandemic. 

"The big question is whether it (inflation) is here to stay," Dmitriy Krichevskiy, an associate professor of economics at Elizabethtown College, said. 

To estimate how long these higher prices will last, we must first understand why we are seeing such high inflation. Krichevskiy said it's for a number of reasons like:

  • Supply chains adjusting to high demand post-pandemic 
  • Money being pumped into the economy 
  • Industries adjusting after being shut down or altering the way they operated throughout the pandemic 

While we won't know exactly how the pandemic will impact post-pandemic prices long-term, Krichevskiy said early data is somewhat promising. 

"I think some of [inflation] is here to stay, but I think some of it will go away," Krichevskiy said. "We already see some futures for lumber prices and things like this going down." 

For the time being, retirees should make short-term changes to their budgets. However, if your income is social security, it does have a cost of living adjustment. For those about to retire in the next five or so years, Krichevskiy said there's not much you can do. 

"There are choices they made when they were young that are going to dictate what they can or can not do," he said. "There's not a whole lot they can do other than decide to work more or be done working." 

Other than making small adjustments to your budget to offset some higher than normal prices, Krichevskiy's number one advice is to not panic. 

"I think sitting and waiting, quite frankly, is the best take on things right now," he said. "Especially since the stock market is doing quite well."

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