Inflation can be tough to deal with, especially for seniors. You depend on your hard-earned assets to cover living expenses, and rising prices may force you to deplete those faster. The fantabulous news is that there are strategies, ways and methods to handle the monster of inflation for seniors. This article will discuss a few ways seniors can get help dealing with inflation.
1. Create a detailed budget
Budgeting is a great starting point for seniors trying to deal with inflation. Making a budget helps you evaluate expenses and find areas to cut back. For example, you might downgrade or cancel streaming subscriptions you don’t use much or cut back on dining out a few nights per week.
Once you have the budget and slash your expenses, sticking to it can help you live within your means and stretch your assets further.
2. Get an inflation rider on your life insurance policy
High inflation can erode the value of your life insurance death benefit. That’s why a policy with an inflation rider can be the best life insurance for seniors.
Inflation riders increase your death benefit by a fixed percentage like 3% to 5% every year helping you keep pace with inflation and offering your loved ones more financial assistance if you pass away. Inflation riders may cost extra in premiums, but the death benefit increase can be well worth the additional money.
3. Time your Social Security well
You can start taking Social Security as soon as age 62, but you aren’t required to until age 70. Postpone the idea of availing Social Security to enhance your benefits. So, it may be a good idea to put off Social Security as long as you can.
If you aren’t sure your assets are sufficient to last until 70, you may consider working a bit longer. This provides you with a steady income stream for a longer period, letting you put off Social Security and continue to save.
Also, Social Security uses your 35 highest-earning years to calculate your benefits. Working longer gives you a chance to increase the earnings numbers used to calculate your benefits. If you earn more, you may get larger benefits.
4. See if you can downsize
Many seniors find that they can downsize to save money without sacrificing a comfortable retirement. For example, if all your kids have moved out, you might be able to sell your current house and move into a smaller one.
This could help you finish off your mortgage on your current home and secure a low payment on the new home. Alternatively, if you own your home outright, this could allow you to buy a new one outright and save the extra money.
Similarly, you may not need two cars anymore if you or your spouse aren’t working. You could sell one of the cars, pay off any remaining auto loan, and stash the rest.
5. Keep inflation at bay
Living on a fixed income can seem difficult for seniors who are otherwise supposed to enjoy their golden years. But fortunately, taking a few steps can help you reduce the impact of inflation on your assets and lifestyle.
Start by creating a detailed budget and consider protecting your life insurance death benefit with an inflation rider. Meanwhile, delaying your Social Security as long as possible may be beneficial, and see if you can downsize your home. Following these steps will help you fight off inflation and stretch your wealth further.
6. Have an Emergency Fund
Seniors should aim to have a solid emergency fund in place to help weather unexpected expenses and financial setbacks. This could include setting aside money for medical bills, home repairs, or unexpected loss of income.
Also, Investing in assets that are likely to retain or increase in value during times of inflation can help seniors protect their savings. This could include stocks, bonds, real estate, or gold.
Plus, a fixed income investment, such as a bond, can provide a steady stream of income that is less affected by inflation. This can help seniors maintain their purchasing power and meet their basic needs.
7. Government Assistance Programs for Seniors
Seniors can use their Social Security benefits to help offset the effects of inflation. The Social Security Administration typically increases benefits each year to account for inflation, known as cost-of-living adjustments (COLA).
Also, SSI is a federal program that provides financial assistance to low-income seniors, including those who are blind or disabled.
Medicaid is another joint federal-state program that provides health care coverage to low-income individuals, including seniors.
While not directly related to inflation, it will help seniors with healthcare needs, which can be one of the most significant expenses in retirement.
Many states also offer senior meal programs that provide nutritious meals to seniors at a reduced cost or for free.
As a senior it is important to realize that inflation can jolt you as well. However, timely savings, investments or consistent income streams will help you fight inflation in the best way possible.