Getting through the pandemic was hard enough. Unfortunately, now older adults face another bump in the road in the form of rising inflation rates.
Even older adults with savings and monthly Social Security checks are struggling. The Senior Citizens League discovered that the majority of older adults’ expenses have grown by more than $20 per month. In fact, 40% of the retirees that participated in the survey confessed that their monthly expenses shot up by more than $100. These increases can be very detrimental to your financial security, especially if you’re relying on your savings and your pension.
Times are indeed hard, so you need to protect your financial health by adjusting your financial management strategies. Now that inflation rates are rising, here are a few strategies that can help you cope with the economic crisis:
Protect Your Pension
Pensions are supposed to provide financial stability for retirees, but what happens when inflation disrupts your supposed security?
Due to the rapid increase in the cost of living, the SSA has provided a 5.9% increase for Social Security benefits and SSI payments since December 2021. While these pension increases could mean a great deal for some, Fourth Point Wealth’s Chris Janeway points out that fixed income is not enough, considering that food and travel costs are rising rapidly. Recognizing this problem, financial experts recommend that retirees protect their pension by converting it into an annuity or purchasing financial products that can beat inflation rates.
Adjust Your Budget
Aside from protecting your pension, it’s also necessary to adjust your spending habits.
With inflation hitting a 39-year high, the budgeting guides from AskMoney are a helpful resource for individuals who want to learn how to pay off their debts, reach their financial goals, and manage their finances in an economic crisis. For example, their article on the effect of inflation highlights that you will need to prioritize your budget and cut back on optional expenses now that the cost of living continues to rise. Given the limitations of fixed incomes, it’s crucial that you allocate your funds wisely for necessities like food and medications.
Increase Your Income
If your fixed income isn’t enough to cover all your expenses, looking for alternative sources of income becomes even more important.
Our guide to the ‘Best Side Hustles for Caregivers and Seniors’ points out that you may have to give up some of your free time for a part-time job, but this can help cover your regular expenses and your additional needs. So if you want to earn more money, try offering services based on the skills that you excel in and the needs of your neighborhood. For instance, those with green thumbs can offer gardening services, while home cooks can sell meals and baked goods.
Switch to High-Yield Savings Accounts
Planning to safe keep your earnings in a bank account? While regular bank accounts may help in reducing unnecessary purchases, the rising inflation rates can reduce the value of your savings over time.
During this period, it may be better to keep your savings in a bank account that offers higher interest rates. By switching to a high-yield savings account, your savings can compound interest daily. Unlike some investment products, you can easily access your money in case you need to tap into your savings.
Leverage Assistance Programs
It’s not easy to navigate through the economic crisis on your own. The good news is that senior citizens can get financial assistance from the government during high-inflation periods.
One of these options is the Low Income Home Energy Assistance Program, which covers electricity bills and even provides emergency relief in case of disconnection threats or shut off. Since the elderly are more susceptible to cold-related illnesses, this assistance is essential especially during the colder months. You can also apply for food assistance programs, like the Supplemental Nutrition Assistance Program or the Meals on Wheels program.
Inflation can make your retirement a little unpredictable, but you can achieve greater financial stability by making smart money strategies. So if you want more assistance in your retirement, check out our other resources at Kapok. Our articles cover challenges and cultural disparities that you may experience during this period, so that you can live a healthier and happier life.
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