- The cost of living has risen substantially over the past year.
- Retirees on a fixed income may be struggling in light of higher expenses.
Inflation is impacting retirees, too. Here's how to manage it.
Many of us are feeling the financial crunch as inflation rears its ugly head and makes everyday expenses cost more. But as difficult as it may be for workers to absorb those higher costs, it may be even tougher for retirees.
Retirees commonly live on a fixed income. Often, that income consists largely, or even solely, of Social Security.
This year, the average senior on Social Security is in line to receive $1,657 a month. That accounts for the 5.9% cost-of-living adjustment that recipients got going into 2022.
But that 5.9% increase is already failing to keep up with inflation. In December, the Consumer Price Index, which measures fluctuations in the cost of consumer goods, was up 7% from the previous year. And some experts warn inflation could get worse before it gets better, leaving retirees in a tight spot.
If you're retired and don't have much money in a savings account or IRA to help cover your higher costs, then you may need to make some adjustments to cope with rising expenses. Here are three things you may want to do.
1. Work part-time
There's an abundance of open jobs these days, and many industries are eager to hire. You may have a relatively easy time picking up part-time work.
That said, if you're older, you may not want to take a job that forces you to interact with people due to COVID-related concerns. If that's the case, you can seek out opportunities that can be done remotely, or in an outdoor setting. If you have the energy for walking dogs, for example, that's a good way to get exercise and earn a little cash. Otherwise, you can look at jobs like telemarketing or data entry from home.
There are two expenses that tend to eat up seniors' income the most. One is healthcare, and you may not have much wiggle room there. The other is housing, and if you're living in a larger home, downsizing is something you may want to consider.
If you no longer have a mortgage on your home (or even if you do), you might manage to sell it at a nice profit, especially given today's home values. You can then use your sale proceeds to buy a less expensive home and tap the remainder of that cash to cover living costs. Plus, by downsizing, you might lower your utility costs, property taxes, and insurance premiums, freeing up more money for other bills.
If you're mostly living on Social Security, there are some parts of the country where those benefits will go further than others. It could pay to relocate to a less expensive part of the country if you're struggling to keep up with your bills.
Of course, there's a cost to picking up and moving -- one you'll need to consider before deciding to upend your life and restart it elsewhere. But we don't know how long inflation levels will remain high, and making that initial investment could set you up to eke out savings for years after the fact.
Rampant inflation is a tough thing to cope with, no matter what stage of life you're in. But if you're retired and are struggling, it pays to consider these changes to compensate for the fact that the cost of living keeps going nowhere but up.
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