The introduction of tariffs at the start of the month shouldn't have come as a surprise, considering President Trump pledged to impose them on trade partners throughout his bid for office. But once things became official in early April, a world of upheaval ensued.
Stocks plunged. Economists increased their recession warnings. And a lot of people have no doubt been in a state of panic.
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If you're a retiree on a fixed income, you may be particularly concerned about the impact of tariffs on your day-to-day finances. Many retirees get most or all of their income from Social Security. And so far, last year's cost-of-living adjustment isn't even keeping pace with inflation. Throw tariff-fueled cost increases into the mix, and it has the makings of a very stressful time.
Navigating all of this uncertainty may be a tough thing to do as a retiree. But here's what you should and shouldn't do.
1. Brace for higher costs
Tariffs have the potential to drive up the cost of just about everything, from groceries to clothing to electronics. For this reason, it's important to anticipate higher costs -- and make strategic cuts in your budget to make up for them.
Take a close look at your spending and see where there might be room to cut back. That could mean canceling a few subscriptions or unloading your car if you've been thinking of giving it up and relying on public transportation.
2. Don't go overboard on stocking up
There's a good chance a lot of the things you buy will get more expensive in the coming weeks and months as the impact of tariffs takes hold. But tempting as it may be to stock up on essentials, you'll want to be mindful of your near-term spending if you're someone who lives on a pretty strict budget.
Interest rates remain high, so the last thing you need right now is a whopper of a credit card balance you have to carry forward. It's not worth buying several months' worth of pantry staples at what could be a lower price if it lands you in credit card debt.
3. Find ways to boost your income
Even without tariff-induced price increases, you may be having a difficult time making ends meet. But things could unfortunately get worse before they improve.
That's why now's a good time to look at boosting your income. And given that the economy is still strong from a job-related standpoint, it's a good time to go back to work in some capacity, whether it's a steady part-time job or a gig role.
If that doesn't suit your lifestyle, you may be able to find other ways to creatively drum up cash. That could mean selling one or two antique furniture pieces of value, or renting out a parking space in your driveway if you live in an area where it's tough for commuters to find a spot.
You may also be able to turn to your investment portfolio for an income boost. Even if you don't have a very large nest egg, you may be able to shift into more income-producing assets, like dividend or bond ETFs.
It's too soon to predict exactly how tariffs will affect the U.S. economy, and how that will trickle down to individuals. As a retiree, it's natural to be a bit nervous -- everyone is. But it's important to take action rather than spend your days worrying about rising costs. That means assessing your spending carefully, buying goods judiciously, and figuring out how to give your income a lift.
