This year, the cost-of-living adjustment for Social Security was at 5.9%, which is the highest rate in over 40 years. This increase was due to the rising cost of various goods and services. Besides food, the cost-of-living adjustment helps support many people’s retirement income.
Although increasing Social Security benefits is helpful, living on a fixed income can still be challenging due to the rising cost of living. Another concern is the possibility that inflation will increase even further. This is why it is essential to think about strategies to help reduce inflation’s impact on your retirement plans.
Investigate Spending
Instead of your credit card and bank statements, look at your spending. This will give you a better idea of how much you have spent. You’ll also see if the expenses have increased over time. This will allow you to make an informed decision regarding your payments.
Budget Analysis
Take a break from your credit card and bank statements for a couple of weeks to analyze variable and fixed expenses. The former includes your mortgage, rent, and utilities, while the latter includes your insurance, phone bill, and cable payment. Your variable costs, such as your spending on food, clothes, and hobbies, can change.
Reduce Major Expenses
If you’re planning on taking an extended vacation but have yet to pay for it, consider postponing the trip. If you can’t make it to the end of the month, you might want to put some of the money saved toward a luxury purchase, such as a new boat. You might also have a chance to use these funds later on, to pay for other expenses.
Downsize
If you’re planning on staying in the same town, a smaller home can help reduce your expenses. If you’re looking for a neighborhood close to services and supermarkets, consider buying a property in a condo or retirement community. You could also sell some furniture that won’t fit your new home. The proceeds from the sale will be used to cover current expenses or set aside for the future.
Prioritize Your Portfolio
Before you started working, you may have invested some of your money in different products and accounts. Having a good understanding of how your investments are diversified can help you avoid experiencing a prolonged period of inflation. Although some experts have estimated that inflation will continue to rise, history shows that it can vary. By taking the necessary steps now, you can continue living comfortably and be prepared for the future.