The United States economy has recently burdened retired and retiring seniors with an additional layer of financial stress. Becoming financially comfortable in retirement has already presented a significant challenge for many; however, rising rates of inflation have made this goal even more difficult to achieve. Forbes recently reported that between October of 2020 and 2021, inflation increased by 6.2% – the fastest rate since 1990. This has led to heightened concerns among retirees and those nearing retirement age. One-quarter of Americans see inflation as the greatest risk to their retirement, and 71% of retirement-age investors worry about how it will affect their current savings.
So, how can retirees supplement their fixed retirement income to meet the challenges of rising costs and dwindling savings? Below are a few popular options.
Work Part Time
While this is not the ideal for many retirees, it can go a long way in padding their finances – even if only temporarily. Continuing to work in retirement has several other benefits as well.
The social aspects of a stable job are good for mental health and help stave off the potential isolation associated with aging. What’s more, delaying the time at which you begin receiving Social Security benefits up until age 70 can increase your monthly payment.
Minimize Everyday Expenses
Evaluating your daily and monthly expenses and reigning them in can go a long way in prolonging your fixed income. Here are a few suggestions from a roundtable of expert Forbes contributors:
- Use portable heaters in the main rooms of your home to lower your natural gas bill
- Heat only the rooms that you occupy during the day
- Use credit card points to pay for gas
- Call your cable, utility, and wireless providers to seek better deals or promotional prices
- Utilize senior citizen discounts or deals for AARP cardholders wherever you can
Rely on Your Community
Local nonprofit organizations, churches, and government programs often provide support to seniors. These will vary based on location, but it is never a bad idea to explore these options. For example, a church may offer a food pantry for senior citizens to ease grocery expenses, while a city program could provide some form of financial assistance.
Invest in TIPS
Treasury Inflation-Protected Securities (TIPS) are designed to protect investments from inflation. Essentially, the principal investment will grow or shrink in direct correlation with inflation rates as recorded by the Consumer Price Index. They pay interest twice a year and can be a helpful source of additional income.
Invest in Series I Bonds
Series I bonds are U.S. savings bonds that accrue interest using a combination of a fixed rate and the inflation rate. This inflation rate is set twice per year while the fixed rate stays the same for the duration of the bond. They are a low-risk option that can help protect your savings and offer extra financial relief.
Take a Reverse Mortgage
If you are an eligible homeowner 62 or older, a Reverse Mortgage could be the perfect option for supplementing your fixed income. They allow you to access the equity you have amassed in your home in the form of various payment options (e.g., monthly payments or a line of credit). From eliminating your monthly required mortgage payments to providing you with tax free proceeds, there are many ways a Reverse Mortgage can be structured to support retirees like you amid today’s increasing financial uncertainty.
Would you like to learn more about how a Reverse Mortgage can offer financial stability in retirement? Contact Retirement Home Equity Advisors today! We are a team of licensed specialists serving senior homeowners throughout the States of Arizona, California, and Colorado. We can help you strategically leverage your home equity to decrease risk and improve financial stability throughout your retirement.
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