LIKE MILLIONS of other Americans, I’m experiencing serious sticker shock when I gas up the car.
Last week, I was filling up my 2019 Ford F-150 and, for the first time ever, the bill topped $100. That was 21 gallons of regular unleaded at $4.85 a gallon.
Shelling out that kind of cash for a tankful of gas is hard enough for working folks. But for those of us who are retired and living on a set income, sky-high gas prices—along with the soaring cost of groceries, electricity and other necessities—are causing us to revisit our budget and make painful spending cuts.
The economic term for this is demand destruction. Just like it sounds, it means people buy less of something that’s become too expensive. I’m seeing it play out in my own budgeting.
Before I retired from the corporate world last year at age 61 to pursue a second act career as an author and storyteller, I created a detailed, line-by-line spreadsheet of my expenses for the next few years until I start taking Social Security. The goal was—and still is—to live off a modest pot of taxable savings without dipping into my retirement funds. I intend to stretch out those savings for as long as possible.
But my best-laid plans have run into the hard realities of rampant inflation. The calculus on the transportation line of my budget is particularly ugly.
I own a cabin in the Endless Mountains of Pennsylvania, just south of the Elk Mountain ski area. I regularly make the drive there from my girlfriend’s house two hours to the south, near Harleysville, Pennsylvania. It’s a 120-mile drive one way, and I average between 18 and 20 miles per gallon in my 2.7L EcoBoost F-150—meaning I burn about six and a half gallons of fuel each way.
At $4.85 per gallon, that amounts to roughly $30 each way, or $60 roundtrip. I typically make the trip once a week, so we’re talking about $250 per month in fuel costs just to go back and forth to the cabin. Add in the other local driving I do, and I’m spending about $400 on gas in a typical month.
My retirement budget—put together at a time when gas prices were two-thirds of what they are now—called for spending about $250 a month on fuel. So right there, I’m over budget by about $150 a month.
The pain of higher gas prices also extends to the entertainment line of my retirement budget. Last year, I bought a 30-foot Keystone ultra-lite travel trailer for the traveling that Rachael and I plan to do in this new phase of our lives. When I have that trailer attached to the truck, my gas mileage plummets to a horrid 10 miles per gallon.
We typically drive about 200 miles roundtrip on a given camping trip, except for trips out west, when the calculus changes dramatically. At nearly $5 a gallon, an average 200-mile roundtrip drive with the trailer attached will cost me upwards of $100.
If we take two trips a month during the summer, as we’d planned, we’re talking $200 a month just to tow the trailer back and forth from camping spots. That’s compared to the $120 per month I’d budgeted for vacation-related gas purchases when I built the spreadsheet. At that time, gas cost about $3 per gallon.
Between everyday driving and fuel for the trailer, I’m at least $230 over my monthly budget because of higher gas prices. That may not sound like much, but when you’re on a fixed income and also paying dramatically higher food and utility costs—not to mention your medical insurance—it makes it that much harder to stick to the plan.
What’s an early retiree to do? It’s a zero-sum game, after all. There’s only so much to go around. The options, as I see them, are to dip more into my savings, or go back to work in some fashion, or further cut expenses in a budget that’s already trimmed to the bone. I really don’t like the first two options, so I’m going the belt-tightening route. Practically speaking, this means:
Is this not demand destruction at work? If millions of others are doing the same, it must eventually cool the economy, and inflation along with it. The question is, will it cause the economy to tip into a recession? That’s the big issue the financial markets are grappling with these days. No one knows. But I suspect the answer lies with the collective spending decisions of consumers like you and me.
James Kerr led global communications, public relations and social media for a number of Fortune 500 technology firms before leaving the corporate world to pursue his passion for writing and storytelling. His debut book, “The Long Walk Home: How I Lost My Job as a Corporate Remora Fish and Rediscovered My Life’s Purpose,” was published in 2022 by Blydyn Square Books. Jim blogs at PeaceableMan.com. Follow him on Twitter @JamesBKerr and check out his previous articles.