Elderly forced to cut back as cost of gas, groceries increases

from the South Florida Sun Sentinel

By Harriet Johnson Brackey

Mary Manuel, who turned 73 last month, figures it out, ride by ride.

To get to the doctor, she needs $2.50 to take a bus service for seniors and the disabled. Then another $2.50 to ride home. If she needs to see the kidney doctor and the dentist, that's $10. This month, she has appointments with the eye doctor and her primary physician. That's another $10.

Seniors in South Florida, like others, say they're feeling the financial pinch. In response, they are making changes to their spending habits in ways both big and as small as planning ahead for a $10 bus fare. That's exerting pressure on South Florida's economy, which already is reeling from falling home values.

"The Lord bless, I'm able to pay all my bills," Manuel said. "You pay one bill and the next bill comes in, and it has gone up. It won't be 10 cents or 50 cents more, either. And my water bill is terrible. The light bill. Don't say anything about groceries."

Two major forces are squeezing seniors today like a vise grip, said Lynn Reaser, chief economist at Bank of America's Investment Strategies Group. On one side are the Federal Reserve's efforts to rescue the economy by cutting interest rates, which lower the income seniors earn on their savings accounts and from some investments. On the other side is a global surge in commodity prices that is causing food and gasoline prices to spike.

In South Florida, consumer prices are rising faster than any other metro area in the nation.

"Seniors perceive their inflation to be a lot more than everyone else's inflation," Reaser said.

A close look at senior centers and programs catering to seniors in South Florida suggests that plenty of people are pressed for money. It's not just the poor who are hurting, but middle-class seniors have been buffeted by the stock market's rough start this year and dropping interest rates, as well.

At the Area Agency on Aging, Palm Beach/Treasure Coast, there are so many people on the waiting list for low-cost Meals on Wheels home-delivered food that the program would have to nearly double in size to feed them all. And at one satellite office, the most recent data available shows that the amount of federal aid doled out to help people pay their electric bills last October was $19,595, compared to an $8,112 monthly average the year before.

Seniors a key factor

Seniors - and their money - are a huge economic factor in South Florida. One out of five people in Palm Beach, Broward and Miami-Dade counties are age 60 and older. Their spending, from Social Security checks, investment portfolios and pensions, is a foundation of the region's economy.

All consumers, including seniors, are spending less than last year at this time.

Florida's sales tax revenues in February fell almost 13 percent from the month before and are running 7 percent less than in 2007, even though the state's economy, in the first three months of the year, was growing at a 2.7 percent annual pace.

Those paring back spending are at all income levels.

Mary Manuel, of Fort Lauderdale, lives on less than $13,000 a year. But even 96-year-old Mary Walsh, who lives comfortably in the adult community of Century Village in Palm Beach County, is watching her wallet. She's going to cut back on playing bingo from twice a week to just once. Why? The ticket is $7. Walsh remembers watching people turned out of their homes in Brooklyn in 1932 during the Great Depression.

She mentions that, to point out: "I know how to save."

And that's the paradox. Even well-to-do seniors say they are spending less. Those whose income is low are simply going without. Most are somewhere in between.

They are like Jeanne Green, 72, a retired administrative assistant who lives in Pembroke Pines: "I've cut a little here and there, she said. "Now I don't have any extra money at the end of the month. But I'm getting by OK."

At least on paper, most South Florida seniors are not poor. Nine out of 10 in South Florida are not living in poverty, according to federal poverty standards and statistics from the Florida Department of Elder Affairs. Poverty among the elderly has been on a downtrend for more than 40 years. Nationwide, the proportion of children younger than under 18 living in poverty is twice the rate for seniors, according to Census Bureau statistics.

Groceries are the one consumer expense that seems to prickle seniors the most. The cost of dairy products rose 13.4 percent last year. Cereal and bakery products in March were 13.3 percent more expensive than the year before. And overall, food price increases last year were at the fastest pace in almost three decades.

"At Easter and at Passover, we were waiting for the price of eggs to go down," said Edith Lederberg, executive director of the Aging and Disability Resource Center of Broward County. "It did not happen this year. They stayed up. That was hard on anyone trying to bake a Passover cake that requires six eggs per cake."

Budget out of line

Making a budget work is difficult for all families. For seniors, the challenge can be especially complicated, because a personal budget made five or 15 years ago can't keep up with gasoline that costs almost $4 a gallon.

Or consider the situation facing someone retired for 30 years, like Irving Kessler, 92, of Delray Beach. Faced with his litany of costs, Kessler took out a reverse mortgage to make ends meet. A reverse mortgage is a loan available only to those 62 and older. It allows seniors to receive monthly payments based on their equity in their the homes. When the senior dies or moves out, the house is usually sold to repay the debt.

He and other seniors are proud of their ability to cope with tough economic times. Those who have been lifelong savers say they know how to live on less than their income. They point out that they don't need to buy expensive clothes to wear to work. They don't commute to an office, so they can cut back on driving when gas prices are high. Vacations can be shorter or skipped altogether.

Besides having more flexibility than those in the work force, retirees have a certain amount of insulation from economic fluctuations. For instance, those who are retired don't have to worry when companies start cutting jobs.

And their incomes keep rising, because Social Security retirement benefits are adjusted annually for inflation. Of course, some of the annual increase is offset by higher costs for goods and rising premiums for health insurance through Medicare that seniors must pay. Social Security benefits account for about 40 percent of seniors income, says the Social Security Administration.

For many seniors, surviving financially comes down to a question of tactics. They start with a laser-like focus on their personal budgets. That means attacking even the smallest cost increase.

At Century Village in West Palm Beach, an umbrella group of civic organizations that represents 7,854 condos mostly owned by senior citizens is trying to negotiate a lower cost for switching the community's cable service to digital. Comcast says that switch will add $3 a month per cable box to a resident's bill.

Pat Soderholm, 72, of Davie, says she picked up some good information at Christian Community Church in Tamarac, which just finished a five-sermon series about personal finance. One thing she's doing now: Carrying a list, on index cards, of everything she needs to have in the kitchen when she goes shopping. It helps her to buy only what she needs.

"I used to stop and pick up something and come out with $50 worth of stuff," she said.

For other seniors, the goal is not to reduce spending but to protect their investments and try to increase the income they get from their portfolios.

Stephen Blum, 60, a semi-retired advertising executive in Delray Beach, fears what's going to happen when he has to roll over his certificates of deposit in August. He has watched the prime rate drop from 8.25 percent a year ago to 5 percent today, thanks to seven cuts in short-term rates by the Federal Reserve Board.

"I'm asking every single person I meet what their strategy is going to be," Blum said. "I think we'll just hunker down for now."

That means putting off a vacation to Europe, he said.

The Fed's goal has been to shore up the softening economy and seniors have a stake in that, too.

"As long as companies pay the dividends, that's what we need to live on," said Walter Clifton, who lives in the Whisper Walk adult community west of Boca Raton, where he says many neighbors have pensions, so they feel insulated from the economy's swings.


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