As the war with Iran intensifies, Americans should expect prices to jump. The cost of essential goods is predicted to rise, per CNBC.
Seniors on a fixed income could experience a significant financial strain, limiting their buying power — here’s what you need to know.
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Americans Will Get Hit Hard at the Pump
The disruption of global energy supplies is a major fear because an interruption will lead to surging oil prices and potentially re-accelerate inflation, according to The Guardian — which retirees will feel financially.
“The most direct place that seniors on Social Security will get impacted is at the pump — gas prices are likely to go higher as the flow of oil out of the Middle East is impacted,” said Marc Butler, financial planner and advisor with Anthony Petsis & Associates.
“Also, seniors who heat their homes with oil would also be impacted,” he added.
Social Security recipients won’t see a change in their checks, but feel the pinch through higher prices.
“If the conflict pushes oil prices up, it can create a ripple effect by increasing the cost of transportation, utilities and food, which reduces the purchasing power of households living mostly on a fixed income,” said Christian Morales Reyes, certified public accountant (CPA) with Numbers Consulting.
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Americans Could See Increased Prices Right Away
If tensions with Iran continue and cause gas prices to climb, Americans will see costs rise within a few days.
“Gasoline is usually one of the first places consumers feel an oil shock, often within days to a couple of weeks, depending on local market conditions,” Reyes explained. “Grocery and utility costs can follow as higher transportation and energy inputs move through the supply chain.”
The Most Immediate Financial Threats to Seniors
Many seniors already have tight budgets, but the Iran war could put additional financial pressure on them.
“The most immediate threat [to seniors] is a cash-flow squeeze,” Reyes said.
Between mediations, housing, food and other monthly expenses, many retirees are stretched thin. The war could make it more challenging.
“They may have to make difficult choices right away about what to delay, reduce or go without,” Reyes explained.
Basic everyday needs can’t be avoided. Seniors will have to buy food and gas, which will add to the stress on their Social Security checks.
“For many retirees, when those costs go up at the same time, it can quickly affect the rest of the monthly budget,” Reyes added.
Social Security Cost-of-Living Adjustments Won’t Keep Up
When there’s no conflict, Butler said the Cost-of-Living Adjustments (COLA) have “generally kept pace with rising energy costs over the last few years,” but not with inflated grocery prices.
“Many seniors feel that strain in their monthly budget right away, while any adjustment to benefits comes later, after the damage is already done,” Reyes said, if costs skyrocket in a short time frame.
As uncertainty persists, volatile energy prices could reignite inflation and eat into fixed incomes for millions of seniors.
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This article originally appeared on GOBankingRates.com: Social Security Checks vs. Rising Prices: What the Iran Conflict Could Mean for Seniors’ Buying Power
