Inflated costs have changed how Joaquin Mayoral of LeRoy does his grocery shopping.
Mayoral is a retiree who enjoys driving a truck, but he has stopped using that vehicle for his commute to Bloomington-Normal.
Instead, he and his wife travel via a small car. It's cheaper than gas for his truck. “Half a tank is like $80 and I’m on a fixed income. That adds up,” Mayoral said.
He and his wife also have postponed a trip to the West Coast to see their son. “(We) second guess that trip for sure and my brother lives up in Michigan,” Mayoral said. “I’ll bite the bullet on that one and visit him for sure.”
So far, he said, inflation is more of an "annoyance" than a devastating issue.
Inflation costs can be a bigger problem for people who drive a lot. Gary Kovalaske of Bloomington drives a mail delivery truck for his postal carrier job in Minonk, a daily 65-mile round trip.
“It makes me wonder if I should move to Minonk,” Kovalaske said. “I work in Minonk, so I’m driving back and forth, plus I do have a 100-mile route, six days a week. It costs quite a bit more for me to do my job.”
Kovalaske said he and his wife both work, so they're doing OK, but higher costs hit them at the grocery store, too. He said they shop at lower-cost grocers now.
“I probably buy more at Aldi and Walmart now,” Kovalaske said “We still buy plenty of food at Sam’s Club and Meijer, but we watch for sales and look for the best deals they got.”
For some, prices can still be too steep at discount grocers. Susan from Normal, who declined to give her last name, said she and her husband love chicken wings. But she got sticker shock when she went to buy a bag.
“I thought, 'Oh, $14.99 that’s not bad.' I’ve seen it at Sam’s a lot more, even though it’s probably a larger bag. Then I look at the price I was paying per pound, which was $3.80, which for chicken wings I can’t.”
Since she lives on the outskirts of town, Susan said she tries to bundle errands together to save on gas, adding she's fortunate as a retiree and empty-nester that she's not trying to feed a family anymore.
Retiree challenges
Retirees face their own challenges when dealing with rising costs. Their cost-of-living adjustments through Social Security have not kept pace with inflation.
Rich Gray of Bloomington retired early from State Farm nearly 20 years ago. Like many others, he's had to cut corners with costs going up, but he has no plans to stop his daily visits to the coffee shop that is more about camaraderie than coffee.
“I hope the doughnut place stays in business, to have a place to go drink coffee in the morning and listen to lies across the table,” Gray quipped during his regular stop at Denny’s Doughnuts in Bloomington. But Gray said it's no lie that he can't afford to eat out as often.
“I go once a week to a restaurant now,” Gray said. “You go in and have breakfast at the Parkview Inn and it’s $8 and something for biscuits and gravy and coffee. Those prices keep going up.”
Gray said he also doesn't trade cars, trucks and motorcycles like he used to, adding he's living off about half the monthly income he was paid when he was working, but it's enough to get by. Gray said he worked as a part-time driver for a few years after he retired, but has no plans to do that now.
Willie Adams of Bloomington drove a concrete mixer until he retired about 15 years ago.
“You can’t get as much as you used to anymore," he said. "You have to figure out what you are doing. Gas prices, that’s what’s so high, the food, nowadays going twice as high as what it should be.”
Adams said he set aside for retirement while he worked and his wife did, too. Their combined retirement incomes are getting them through these uncertain financial times.
“It helps for the present time, but if you don’t have Social Security and retirement you’re not going to make it,” Adams said.
Retired teachers don't have Social Security to fall back on; state pensions that they pay into have to be enough.
Kathryn Gossard of Bloomington was a speech pathologist and grade school teacher in Unit 5. She's been retired for more than a decade and said her pension can withstand the higher costs — but not everyone is as fortunate.
“I do know that older retirees and some from smaller school districts in the state get by on a much lower pension that I do,” said Gossard.
She said retired teachers can pay into a foundation through the Illinois Retired Teachers Association to help other retired teachers cover certain medical costs, noting she tries to conserve to help others.
“I need to be as careful as I can with the things that I use and ride my bike when I can and walk when I take care of errands that are close by home and do as many things as I can to make my pension stretch,” Gossard said.
401ks are hurting
Many retirees and those close to it rely on a 401k-style plan to cover their retirement years.
Ajay Samant is dean of the Illinois State University College of Business and a finance professor. Samant said those with 401ks are not feeling great right now.
“The decline in the stock market accompanied by inflation is a double whammy on those who are either retired, or are contemplating retirement,” Samant said.
The steady drop in the stock market this year has caused some to rethink when they retire.
Sean Craig is an investment planner in Bloomington. “There’s been a lot of people that have talked about delaying (retirement) or even going back to work a little bit due to dropping 20% on their investments,” he said, referring to how much the stock market fell in the first half of the year.
Bonds are usually considered a much safer investment, but those have done poorly, too.
Samant said many investors are spooked, adding inflation, worker shortages, and the war in Ukraine have helped create a bearish Wall Street.
“When there’s so much uncertainty, when companies are not able to hire the people they want, when there are supply chain bottlenecks and they are concerns about corporate earnings, this has resulted in a downturn in the stock market,” Samant said.
It's not clear how long it will take for the markets to rebound. Craig said the best advice for investors is to not overreact and just ride it out, but that can be tough when there's so much uncertainty.
“We just don’t know how long inflation is going to last and how long is the market going to continue to go down,” Craig said.
Samant thinks the Federal Reserve has taken the proper steps to slow inflation, through a series of interest rate hikes — including another 75-basis-point rate hike on Wednesday. They are intended to cool the economy. The downside, Samant said, is that it means a recession is likely.
“These are all steps in the right direction but unfortunately they will cause some pain and the pain will not be evenly distributed across the economy. That’s what (a) recession is,” he said.
Samant said a recession will hurt those on a fixed income the most. People who can't negotiate for better pay, or find another job with better pay also would suffer. He said it helps that gas prices are starting to drop, but that, too, could be a mixed signal.
“It could also be consumer sentiment is turning a little pessimist. When consumer sentiment turns pessimistic, it impacts consumer demand and that is usually the first cause of a recession,” said Samant, who predicts it will take at least another year for the U.S. economy to stabilize — and it's not clear what a new economic normal will be.
