Amid high inflation and economic uncertainty, many older Americans are returning to work and a growing number of them are engaging in freelance work, according to one study.
More than a quarter (27%) of older workers are doing freelance work, according to a study by the AARP. Among workers between the ages of 40 and 49, that number is even higher at 32%. The reasons for seeking freelance work varied, but 89% of gig workers said making extra money was their main motivator, the survey said. But economic realities also played a role.
Nearly one-third of older workers (30%) said they think they are likely to lose their job within a year due to a “weak economy,” the survey said. More than half or 61% of older workers “have updated their resumes, applied for jobs, posted resumes, gone on job interviews, created LinkedIn profiles or met with recruiters,” AARP reported.
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MANY AMERICANS BELIEVE INFLATION WILL GET WORSE IN 2023
As many older Americans returned to the workforce, they faced an increasingly uncertain economy. And as the country dealt with historically high inflation, many retirees saw their Social Security benefits fail to keep up.
While Social Security benefits increased by 5.9% in 2022, inflation increased by 6.5% year-over-year in December, as measured by the Consumer Price Index (CPI). Although it is lower than the June peak of 9.1%, the inflation rate is still far from the 2% level that the Federal Reserve is aiming for.
In fact, the 5.9% cost-of-living-adjustment (COLA) received from January through December fell short of actual inflation each month by 46% on average, according to a report by the Senior Citizens League. The group found that this dip “left the average Social Security benefit of $1,656 short by more than $42 per month and more than $508 for the year.”
“In older households, many of the goods and services that have the most stubbornly high prices account for the biggest portion of spending,” The Senior Citizens League said in its study. “Since 2020, price hikes for virtually everything posed the biggest challenge for older Americans, particularly lower-income senior households who depend on Social Security for most, or even all, of their income.”
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SOCIAL SECURITY BENEFITS CAN BE TAKEN TO PAY STUDENT LOANS IN DEFAULT
In order to lower inflation, the Fed raised interest rates throughout 2022. The Fed is expected to keep doing so in 2023, even if it moves forward at a slower rate.
Most recently, the Fed increased interest rates by 25 basis points during its February meeting. That followed a rate hike of 50 basis points in December after four consecutive 75-basis point hikes. But the end-of-year move was “(mis)interpreted as a first step towards a less hawkish policy stance by some observers,” according to a January post by the World Economic Forum.
Not one member of the Federal Open Market Committee (FOMA) was expecting rate cuts in 2023, according to the post.
“While it was always clear that the Fed was going to take its foot off the gas in terms of further rate hikes this year, those hoping for a complete reversal will likely have to wait a bit longer,” the World Economic Forum said.
Any increase of interest rates by the Fed may trigger a boost to interest rates consumers pay on financial products like credit cards. If you’re having trouble with credit card debt, you could consider paying it down with a personal loan at a lower interest rate. Visit Credible to compare offers from multiple lenders at once without affecting your credit score.
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