...But The Elderly Are Getting Walloped TwiceBy
Even as senior citizens watch the rates paid on their savings accounts go down, they face another whammy: a higher rate of inflation than other Americans. Medical costs are the big culprit. People over 65 spend 13% of their income on medical care, compared to less than 5% for households headed by people aged 35-44, according to a recent Bureau of Labor Statistics survey of consumer spending patterns. With health care inflation still running at 7.5% annually, that difference carries a big impact. Over the past three months, the inflation rate for someone over 65 was 3.7%, compared to 3.2% for the U.S. overall. A person over 75 years old is seeing an inflation rate of almost 4% annually, which makes the real interest rate on savings accounts close to zero.
The elderly are not the only ones facing higher-than-average inflation rates. Also hit hard are low-income and self-employed households, who pay a disproportionately high share of their incomes for health care. Who has the lowest inflation rate? High-income earners, who are more likely to be employed at jobs with good health care plans.