Skip to Content
Financial advisor speaks with his mature clients while reviewing their retirement documents.
Retirement Planning

What inflation means for your clients' Social Security, Medicare and retirement

Senior couple in grocery store

When inflation is high, your clients are the first to notice. A rise in inflation affects the price of nearly everything else — from gas and cars to groceries and housing. While it's unclear how long this round of high inflation will last, talking to your clients about the impact of inflation on their finances can help ease their anxiety and prepare them for the unexpected.

Here are some questions that they might ask and a few ways that you can respond to ease their worries.

How will my Social Security payments adjust to high inflation?

Older clients may be concerned about inflation's impact on their Social Security payments. Good news: You can provide reassurance by telling them that they will receive a cost of living adjustment to their monthly Social Security benefits because higher inflation translates to a higher cost of living adjustment. In 2022, Social Security benefits increased 5.9 percent to account for the cost of living — the biggest boost since 1982.

I already get Social Security, but should I get a job to make more money to cover the impact of inflation?

One great way to tackle this question is to take a look at what your client has saved. If they don't have a lot in savings, it might be better to work and earn money to build a stronger nest egg. This is always helpful but even more so when prices on nearly everything are soaring. Every cent your client earns while working will be useful when inflation is high by preserving their capital, but remember that if your client chooses to work, the annual earnings limitation for those below full retirement age is $19,560 before benefit reductions are triggered.

How will a rise in Medicare Part B premiums affect me?

As health care costs continue to rise, unfortunately so have Medicare Part B premiums —to $170.10 in 2022 from $148.50 in 2021. Medicare premiums are often the highest health care costs for Medicare beneficiaries, and with inflation pressure already bearing down, this 14.5% increase is likely to rattle your clients. Cutting health care coverage isn't a good option, but making lifestyle changes can help offset the difference, such as cutting back on discretionary spending and trips outside the home to save on gas.

I'm young, and retirement is a long time away. Will inflation still impact me?

For younger clients, retirement might seem like ages away, but it's still a good idea to remind them what they can do now to prepare for the future, such as setting up an automatic monthly transfer into a 401(k). Everyone will feel some kind of pinch from high inflation, young and old alike.

I'm considering retiring. Should I wait, given high inflation?

In 2022, for those turning 62, the full retirement age adjusts to 67. So what this means is that if your client turns 62 in 2022 and claims benefits, the monthly benefit will be cut by 30% of the full retirement age benefit. Take this time to revisit your client's retirement strategy and talk them through the pros and cons of retiring at a time when inflation is high. No one knows when inflation will normalize. Having enough money saved up is always important but especially so when inflation could likely climb even higher.

I'm retired. How will inflation affect my retirement plan?

A common worry among older clients is having enough money in retirement. Most retirees live on a fixed income. Any change in the price of goods and services can hurt their carefully tailored retirement plans. You might want to revisit your client's budget or spending plan to help alleviate some of their financial stress; have a year of expenses saved in cash so they don't have to sell their stocks.

How to help your clients stay calm and make smart decisions

During stressful times, uncertainties like inflation can quickly become emotional and affect your client's decision-making ability. Here are a few tips to help you connect with clients when the situation is volatile.

Identify what they are most worried about.

Every client is different. Some might worry about having enough for retirement, while others might be focused on paying down their debt. By finding out what their biggest concerns are, you can help develop the right solutions and build stronger trust.

Educate them.

Providing your clients with knowledge can empower them and alleviate their fears. Give them valuable resources that they can use even after their appointment with you to learn more information.

Identify their emotional profile.

Do your clients have triggers that affect the financial decisions they make? Ask them how they make financial decisions. Do they watch the news or talk to trusted friends? Stay alert for phrases such as “I'm worried that…" Uncertain situations like inflation quickly have the potential to become emotional and reactionary.

Prepare them for the unexpected.

Remember, dramatic market movements are unpredictable. When you start with a solid plan and adjust it as necessary, your clients will be better prepared to weather uncertainty, no matter where inflation heads next.



Arrows linking indicating relationship

Related Articles

Senior woman with suitcase using a tablet

5 things to know about the Silver Economy

Learn more
Male financial professional sitting at desk talking to older male and female clients sitting across from him

Make understanding annuities easier for clients with this list of basic terms and types

Learn more
Smiling older woman holding balloons and a box of retirement gifts outside office building

What's next after a successful career? Prepare clients for life after retirement

Learn more