How to Best Cope with Inflation as a Retiree on a Limited Income
- Author: Muriel Robel
- Posted: 2024-08-20
The rising cost of living is not easy on anyone. However, retirees are often squeezed the most as inflation spirals out of control. Although the Social Security Administration has increased payments in order to provide assistance to retirees, the additional cash flow may not be enough for many seniors to bridge the gap. Here are a few ways that retirees can better cope with inflation in the coming months.
Scrutinize Budget
If you have not been adhering to a budget, now is certainly the time to do so. Sit down and comb over your budget, separating your costs into fixed and variable expenses. While it can be difficult to cut your fixed expenses, you may be able to shave a considerable amount of cost off of your variable expenses.This may mean that you need to reduce eating out or cut entertainment expenses. There are a number of websites that can help you to find ways to save on your grocery bill even as food costs soar. Be sure to take advantage of the numerous senior discounts available to you.
Delay Major Purchases and Expenses
Unless you feel absolutely secure in your finances, the threat of a recession should make you rethink any major purchases. For instance, this may not be the best time to make that luxury boat purchase or start a new remodeling project. Other ideas to build some security during this time of high inflation is to consider postponing an expensive vacation. You can always incorporate these splurges and luxury purchases into your budget when the economy is in a healthier state.Lean on Extra Cash
It is not unusual to need to leverage extra cash during difficult economic times. Rather than selling off stocks or running up a credit card, you are typically better off leaning on any extra cash reserves that you have. However, you will need to be diligent about adhering to a budget if you are using saved cash to get you by during this time.Consider Downsizing
Many new retirees put off the idea of downsizing because of emotional attachments to the home in which they raised a family. While this attachment is certainly understandable, avoiding downsizing could be a poor financial decision. Not only will moving to a smaller house save on mortgage or rent expenses but it will also likely reduce overall utility costs.
You would be wise to look for communities that serve retirees. Even if you do not feel as if you need help with lawn services or other conveniences provided by retirement communities now, there will likely come a time that you will appreciate these offerings.
Review Your Portfolio
Now is also the time to carefully review your portfolio to ensure that your money is continuing to work hard for you despite the downturn. Owning a well-balanced portfolio will help to protect you against turbulence in industries that tend to struggle during inflationary times.This is also the time to evaluate your risk tolerance level to ensure that the swings of the market are not causing your distress. You do not want to live out your retirement years constantly stressed about your financial picture. Remember that inflation periods will come and go and you do not want to be beholden to the stress of these cycles.
Pick Up a Side Hustle or Part-time Job
If you are a young retiree in good health, now may be a great time to pick up a side hustle or a part-time job. Boosting your cash-flow during this uncertain time period will go a long way in providing you with extra security. There are a number of great part-time jobs available for seniors. This is particularly true if you are looking for seasonal work such as working a retail job over the holidays.Picking up a side hustle is another good option if you want to pad your retirement income. Do you have a special skill set or knowledge base that you can monetize? For example, retired teachers often find lucrative side work as a tutor.
You will sleep better at night if you do what you can to minimize the impacts of inflation on your financial picture.
