Inflation Creates Financial Headaches: Now What?

Catholic United Financial Sales Representatives Offer Ideas to Help Every Age Group Combat Inflation

A spry and just getting started 20-year-old Catholic United Financial Member, Gavin Quade just spent $25 to travel across the Twin Cities metro with a car that requires premium gas. He starts a summer job soon and thinks he will be paid less than last year at the same job.

“I’m going to need to find ways to lower my costs,” states Gavin. “I may have to move closer to work, carpool or something; this is frustrating. Just traveling across town is getting expensive and my parents are not super excited about helping to fill my gas tank every day either.”

Inflation is impacting everyone, from the young to the old. People are feeling it at every level, from gas to food, at rates that we have not seen in a long time. What is the best approach or solution to solve these challenges with growing inflation? The experts at Catholic United Financial will say this will be depend on age, income, the stage in your work career and even family dynamics.

“I love working with young families,” states Team Leader Dave Stang from his home office in Watkins, Minn. He adds, “It’s a fun age group, but they can struggle with how to budget and keep the budget with even daily living expenses from growing exponentially. From daycare to a new mortgage, then add rising prices from gas, groceries, etc., families are finding it harder to make ends meet.”

For the younger generation like Gavin, they are feeling it more as a percentage of their income, with more of it is going to the essentials. This is a new experience for most, and it means not buying the fun stuff, like concert tickets, and focusing on the basics like gas and groceries.

“What I tell young people (and it’s true for anyone really), is that if you spend less than you make, you’ll never get into financial trouble,” says Stang. “Cut unnecessary or ‘luxury’ expenses … from entertainment to even fast food dining—it adds up.”

Inflation can cause higher stress levels from difficult financial decisions. “I’m finding many people are getting hit harder than they thought; it sort of snuck up on them,” states Advanced Case Specialist David Schonhardt from Tracy, Minn. “It’s real though and it hits people psychologically, especially in the day-to-day budget. With everyone so focused on the ‘now,’ they run the risk of underestimating the future cost of loss and not preparing for that possibility—it is important to plan for the worst-case scenario despite inflation.”

Middle Age Workers Are Getting Squeezed, Too

For some in the middle age group, they might even remember when inflation was an issue decades ago (or maybe not). It’s been a comfortable ride for most in this age group when it comes to inflation. Unfortunately, inflation is causing some to be more financially uncomfortable and to reevaluate their savings and planning strategies of the past. “The biggest risk for people in this age group is complacency,” states Schonhardt. He adds, “Don’t panic, but be prepared to move. Part of your thinking should be to look for investments and savings opportunities that are guaranteed and leverage your money in safe ways.”

Member Tricia Lee, age 50, has her husband do more of the financial planning and budgeting, but that is changing. She is wondering if her pay raise last year has already been spent by inflation. “I’m getting more involved in the finances because lately it has been like, ‘Where did all the money go?’ And I want to know! We are being smarter about expenses. I am learning and doing things differently.” She adds, “This may sound funny, but I went to the library the other day for the first time in what felt like years to get a book instead of buying one online. Little things that you wouldn’t think twice about yesterday start to add up and can help you today.”

“I am getting more questions on traditional and Roth IRAs in this age group as of late, states Vicky Giacalone, Team Leader from Waupaca, Wis. “People are starting to rethink their plans. Should they convert a traditional IRA to a Roth? Are taxes increasing to a point where that makes more sense?” She says that locking in great insurance and long-term care rates is a start, but people this age need to make sure that the financial savings and gains over the years can be locked in to keep them ahead of inflation. “We have options like our new WealthChoice product that is a game changer in this age group,” states Giacalone. “You still get market upside, which competes well with inflation with the added benefit of minimizing downside market risk.”

This is a great age to start planning your estate or longterm care plans even during an inflationary time. “When people are healthy, this is the best time to plan for the future,” states Schonhardt. “Take advantage of rates now because we typically don’t get healthier as we age.”

Tricia hopes to retire after the kids are done with college and has a few more years of work thereafter. “I can do this, but I really need to start preparing for retirement too. Every little bit helps in saving money, especially as of late.”

Older Generations Have Seen This Before

Seniors and the soon-to-be retired have experienced first hand the current inflation situation. They have heard this inflation song played before and it isn’t a good tune. Giacalone worries that it will hit this generation harder than others.

“Fixed incomes at this age means purchasing power is diminished,” she said. “A big concern is seeing your retirement funds deplete faster than expected. Inflation creates the need to protect gains and assets as well as making sure you won’t outlive your streams of income.”

“I cannot catch a break. I started work when inflation was raging and now, I’m getting it on my way out, too. Just my luck!” states John Williams, 80, from Bloomington, Minn. “I’ve saved for retirement and I know how to save a penny, but I’m still concerned. Unfortunately, I can’t just run out and get more money to cover an added expense,” he says.

John is a member of the coupon generation, but he still likes finding good deals—even on the Internet. Discounts for prescription medications on websites such as GoodRx.com can alleviate medical costs that have become part of daily expenses. “Until you have a need, you just don’t think about using websites like that. I’m learning, though.”

Social Security cost of living adjustments in 2022 are helping, but slashing bills to deal with skyrocketing prices in areas that you wouldn’t touch before may help as well.

“At this stage in life, I’m a strong proponent of making sure everything is in financial order,” states Giacalone. “With many on fixed incomes, inflation really has become an unexpected expense and my members are feeling the effects. I cannot stress enough for people to do a quick check-in with their local Sales Rep and make sure their plans are financially dialed in.”

Giacalone thinks moving to higher deductible Medicare Supplement plans can even be an option if you think you’ll remain in good health in the future. “That can save significant dollars in some cases.”

“I can get this done. Been there and done that. But it just seems like this could have been avoided,” states John. “I want to visit the grandkids, but I may make them visit me instead to save on gas,” he says with a good-natured laugh.