The price of fresh vegetables has soared

Tag : Canned Vs Fresh Vegetables
Nearly all Americans have felt the sting of inflation in recentmonths. But when you're retired and your sole means of support is afixed amount that arrives each month -- from Social Security and,for the lucky ones, a pension -- the pain is especially severe.
Until recently, many retirees had assumed they had enough income toretire on. That was before gas and food prices began careening outcontrol.
Jannie Hicks, 75, who picked up a box of food at the San Diegosite, is eating more canned vegetables as the price of fresh produce has soared. She's forsaken frozen dinners as too pricey.With gas a luxury, Hicks limits her driving to the grocery store,church and the food bank. She no longer drives to her friends'homes to visit; she catches up by phone instead.
Out of necessity, Carmen Gonzalez, a 73-year-old retiree, hasshrunk her monthly grocery bill from $100 a month to $50 by makingtamales and enchiladas with cheese instead of meat.
"We're all in a mess," she laments, clutching a free block ofAmerican cheese. "For seniors, everything is going up except themoney to pay for things."
Those who work with seniors have seen the problem up close.
"By any measure, people who are retired are bearing the worst bruntof the economic slump," says Jim Dau, a spokesman for AARP."Because they're living on fixed incomes, they're just gettingcrushed on food and medicine that they can't do without."
In a recent survey, AARP found that 59 percent of Americans ages 65or older reported having more trouble paying for food, gas andmedicine. That's why a growing number of financially squeezedseniors are heading to places they've seldom gone before:credit-counseling centers.
"Our offices are telling me that they are seeing seniors coming in,pushing their walkers, who are filing for bankruptcy," says GailCunningham of the National Foundation for Credit Counseling, whichoversees a national network of more than 900 credit-counselingagencies.
Consumer Credit Counseling of the Black Hills in Rapid City, S.D.,is one such site. Typical clients in this office near MountRushmore have traditionally been young or middle-age adults, butseniors began increasingly appearing last year, says Bonnie Spain,the agency's executive director.
"I've been in credit counseling for 20 years," she says, "and evenI am surprised." Cost of living
It's true that Social Security checks are indexed to inflation;recipients received a cost-of-living adjustment each year. Theadjustment reflects the Consumer Price Index-W, an index developedfor so-called urban wage earners and clerical workers. For 2008,the inflation adjustment was 2.3 percent.
But some argue that the CPI-W index isn't realistic for retirees,because it fails to take account of the goods and services theydepend on disproportionately. An alternative inflation indexcompiled by the Bureau of Labor Statistics, the CPI-E, reflectsitems that more directly affect those 62 and older. And the CPI-Etends to rise faster than other inflation gauges. During a 25-yearperiod ending in 2007, it posted an annualized inflation rate of3.3 percent, vs. 3 percent for the CPI-W.
"In general, I would think (CPI-E) is a more appropriate index touse for (indexing) Social Security," says John Rother, AARP'spolicy director.
Rother says he doubts there will be any such move in Congress,until there's major legislation to address the fiscal health of theSocial Security system. As a practical matter, he says, AARP isfocused instead on the rising prices of health care, gasoline andfood, while educating the elderly poor about programs that canprovide some aid for heating bills and property-tax obligations.
Others, such as Alicia Munnell, director of Boston College's Centerfor Retirement Research, suggest that the federal inflationmeasurement isn't short-changing Social Security beneficiaries. Ifanything, Munnell suggests, many academics have been more worriedthat the index tends to overestimate inflation. Measuring poverty
No one disputes, though, that in one specific way, seniors arelosing ground with Social Security: Medicare expenses are gobblingup a big chunk of their Social Security checks. According to theCenters for Medicare & Medicaid Services, the premiums for Medicareand its newer drug coverage, as well as the money needed forco-pays, deductibles and any other costs related to Medicare, eatup 26 percent of the typical Social Security check.
What's also jeopardizing struggling seniors is the antiquated waythat poverty is measured among aging Americans, says SheliaZedlewski, director of the Income and Benefits Policy Center at theUrban Institute. The federal methodology, designed four decadesago, assumes that elderly adults need only 92 percent of the amountyounger Americans do to meet basic needs. In fact, Zedlewskicontends, seniors generally need as much money as younger adults.
Using the federal formula, an elderly couple recently could havereceived no more than $12,533 a year from Social Security and othersources to be considered poor.
For younger Americans, the poverty level was $13,884. In themid-1990s, the National Academy of Sciences recommended in vainthat the poverty formula be changed.
Relying on the academy's methodology, the Urban Institute issued areport in May suggesting that the official poverty rate for those65 and older -- which is 6.5 percent, or 1.8 million people --should be adjusted upward, to 12.3 percent, or 3.3 million elderly. Women vulnerable
Many of the most vulnerable are women. Four in 10 women who arewidowed, divorced or single rely almost totally on Social Security,the Social Security Administration says. Yet many retirees don'trecognize the financial hazards that widows and other women face. Arecent survey by the Society of Actuaries found that only 16percent of retirees were "very concerned" that their survivingspouse might be unable to maintain the same living standard.
"This question to me is a real wake-up call," says Anna Rappaport,a fellow of the Society of Actuaries. "We know overall women are alot worse off after the death of their husbands." A struggling widow
Mary Tout, 75, of Goodyear, Ariz., is one of many widows who arestruggling. She says she could scrape by on her fixed income of$18,000 if she didn't have to care for her 43-year-old son, who isbipolar. A diabetic, Tout lives in a small apartment furnished witha card table, a donated hide-a-bed and a recliner she found atGoodwill. She doesn't have money to pay for her son's medicine.This spring, he tried to commit suicide by overdosing on a stomachmedication after her old car was stolen.
"I get real depressed," Tout says. "I pray a lot that things willstraighten out."
One often overlooked financial burden for seniors is their ownchildren. As much as they're struggling personally, Tout and manyother retirees are dipping into dwindling reserves -- if they haveany -- to help grown sons, daughters and grandchildren. The AARPsurvey concluded that more than one in three retirees are helpingtheir children pay bills.
Zella Scales, a 64-year-old retired autoworker in Columbus, Ohio,is one of them. Ten months ago, she took in her 27-year-oldgranddaughter, had who lost her job, and the woman's two children.The granddaughter is saving for an apartment. But escalating priceshave delayed a move. Home equity drop
Just as inflation is squeezing elderly Americans, the one assetthat's traditionally helped soften the impact of rising prices --home equity -- has been dropping as house prices have fallen. Homeequity, when large enough, lets homeowners borrow on it. Butlately, falling equity and tighter lending rules have reducedaccess to loans.
"This is a huge wake-up call for people who had too muchexpectation that increasing home values was the way to financeretirement," Rappaport says. "The house isn't going up in value,and in many cases today, the mortgage has a higher balance than thevalue of the house."
Retirees fortunate enough to have nest eggs to supplement a fixedincome still face challenges, especially in trying to protectagainst catastrophic bills. Nursing home expenses are spiraling, asis the cost of long-term care insurance. Dawn Helwig, an actuary atMilliman, a consulting firm, says the cost of premiums for newlong-term care policies with inflation coverage has jumped 30percent to 40 percent since 2001, compared with an overallinflation rate of 23.7 percent over that time.
Indeed, inflation is agnostic -- it attacks rich and poor. HenryHebeler, a retired Boeing executive and founder of Analyze Now, aWeb site dedicated to helping retirees, amassed plenty of money tocover his retirement. Yet he's seen the buying power of his pensionshrink drastically during a period of modest inflation. Nineteenyears after he retired at age 55, Hebeler's fixed Boeing pension isworth just 53 percent of its original value.
"I see people around who started off pretty affluent; they didn'tcare much about money when they first retired," Hebeler says. "Butafter a few years, they're picking food more on price, they'vegiven up memberships to exercise and golf clubs to reduce costs,and they've moved into less expensive homes."