After my last blog, where I described the reasons we are experiencing high inflation this year, you might be asking “What can I do to combat inflation in my own life?” As I consulted with my team members, financial professionals that work with retirees all day every day, we came up with twenty-six inflation-fighting ideas that will help the retiree, or those nearing retirement. Some of these ideas will have a huge impact, other ideas are less significant but are things that you may not have thought of previously.
I found it interesting that as we compiled our list, it morphed from being merely an inflation-fighting list into a commonsense checklist of things that every retiree should consider going through as a matter of just being financially responsible. Obviously, not every one of the money-saving ideas on our list will apply to your specific situation, but some will. We are confident that every one of you will benefit from going through this list in your own situation and that you will end up saving money by implementing the applicable ideas. These savings will be helpful for you to maintain your lifestyle as you are squeezed by inflation.
Investment mistakes early in retirement can be devastating and there are no do-overs. So, I first wanted to remind you of the inflation-fighting capabilities of your investments before we talk about any other inflation-fighting/money-saving ideas.
1. Remember, the price we pay for inflation-beating investments is having to endure temporary periods of volatility. Volatility is not risk, the synonym for volatility is unpredictability and in the short-term, equities are certainly unpredictable. You wouldn’t be human if this year’s stock market hasn’t caused you concern, but you need to stay the course and not let yourself be frightened out of owning a piece of some of the most profitable corporations the world has ever known. Compound interest has helped you accumulate the nest egg that you now have. Keep the miracle of compound interest alive during retirement by owning equities. Hold on to your equities if keeping up with inflation is your objective.
2. Have a plan. We follow our proprietary Perennial Income Model™ to create an income plan that protects our retirees’ short-term income from stock market downturns while protecting their long-term income from the ravages of inflation. The Perennial Income Model helps to strike the right balance between owning less-volatile types of investments and owning the more-volatile inflation-fighting equities in a portfolio. It matches your current investment allocation with your future income needs. Do yourself a favor and learn how the Perennial Income Model can help you create your retirement income plan. To learn more about the Perennial Income Model, order a free copy of my book, Plan on Living, here.
3. Have faith in the future and follow your plan. We are not facing an investment apocalypse. Market conditions are cyclical, and we will continue to experience good as well as bad economic cycles. A well-thought-out investment and retirement income plan should have built within itself a contingency plan to deal with economic downturns and periods of market turbulence. In fact, your plan should not just help you to navigate volatile markets it should assist you in taking advantage of them. Don’t allow yourself to get derailed from your plan.
4. If you haven’t started Social Security yet, consider delaying applying for your own benefit until age 70. Beyond the built-in annual cost of living adjustments of Social Security, your benefit will increase by 8% each year that you delay from your full retirement age until age 70 by simply waiting. Your full retirement age is somewhere between age 66 to 67 depending on your year of birth. Receiving 24%-32% more each month in Social Security benefits for the rest of your life can be a handsome inflation-fighting boost.
5. Go back to work. Statistics show that almost half of all retirees go back to work after two or three years of retirement and they go back to work for reasons beyond satisfying income needs. In other words, they get bored, and work satisfies their need for social interaction and the need to be part of something bigger than themselves. Find a part-time job that is interesting to you for a day or two a week. With a nationwide worker shortage, there are endless opportunities for retirees to find the kind of job they would enjoy with the flexible schedule that they desire. Being engaged in something that interests you, while picking up a couple of bucks to help with inflation can be realized…have fun!
6. Replace light bulbs and fixtures with LED. LED bulbs last longer and use 25% less electricity than outdated light bulbs that you still might be using in your home.
7. If you are regularly away from your house during the day, program your thermostat. Don’t heat or cool an empty house. You can drop your electric and gas bills by as much as 10% by adjusting your home temperature by a few degrees. Open a window in the summer or wear a sweater in the winter to offset the mild changes in temperature.
8. Take advantage of the energy-saving programs offered by your power and gas companies. Utility companies provide valuable energy-saving tips and even will send representatives to your home to help you recognize where you could substantially save on your energy bill. They will also keep you up to date with rebates and tax credits that are available to you as you update your home. This service is free or available at minimal costs.
9. Save gas by better organizing your errands. Knock out all your errands in one trip versus three or four separate trips.
10. Don’t run your appliances until they are full, specifically your washer, dryer, and dishwasher.
11. Don’t be shy about asking for senior discounts. We found a website, www. seniorliving.org, that keeps a list of discounts available to seniors or those approaching retirement. It provides dozens of discounts and covers everything from grocery shopping to cruises. We found that many of these discounts are not well known, nor are they advertised by the companies offering the discounts. You will have to know about these discounts in advance and you will have to specifically ask for many of these discounts.
12. Life has become so much easier since we have evolved into online shoppers. Online shopping has also made it easy to comparison shop and find the best deals. Take a couple of extra minutes to compare items as you make your online purchases. We found two websites, Honey and RetailMeNot, that assist you in online shopping. Both websites show you some of the best available coupons on the internet to help you get the best deal possible.
13. Shop your pantry or freezer first. How many times have you run to the grocery store to buy an item, only to later find that same item sitting on a shelf or in your freezer at home. All of us are guilty of wasting food and money as we throw out food that has exceeded its expiration date. According to Feeding America, “Each year, 108 billion tons of food is wasted in the United States. That equates to 130 billion meals and more than $408 billion in food thrown away annually. Shockingly, nearly 40% of all food in America is wasted.” The key to avoiding waste is to take the time to better organize your pantry and food storage.
14. Try using store brands over name brands.
15. Barter – I’m not suggesting that you haggle over everything but, look for opportunities to get a better deal. You will be shocked at the discounts you will receive as you ask one simple question as you book hotel rooms, rent cars, and hire services. Try asking, “is that the best you can do?” That question has saved me thousands of dollars over my lifetime.
16. Audit your own credit card statement. Are there subscriptions that you can eliminate that you no longer use? Gym memberships, multiple streaming services that you don’t use, and magazines that are never read are the most likely culprits.
17. Make an extra effort to pay off debt, especially adjustable-rate loans. Specifically, be mindful to not carry a balance on your credit cards month to month.
18. Consider a lower-cost cellphone plan. With WIFI being so prevalent, maybe that unlimited data plan might not be necessary.
19. Load up on nonperishable items when they go on sale.
20. Work off a budget. It may have been years since you followed a budget but following a budget can be useful to help limit impulse purchases.
21. Do your kids a favor and sell the stuff you don’t use anymore. All who have had to clean out a deceased parents’ home know what I’m talking about. Learn how to sell your unwanted items on eBay, Craigslist, Facebook Marketplace, and more. You will be shocked what people will buy, and who knows, that collectors’ edition Barbie doll that has been hiding in your basement for decades might be worth thousands.
22. Be strategic as you consider making major purchases such as houses. Interest rates will have to rise to cool down the economy. As rates rise, people will be forced out of the housing market and house prices will necessarily drop. Be patient and thoughtful as you consider your next big purchase.
23. Investigate cash back rewards and frequent flier discounts offered by your credit cards and learn to use them.
24. Consider vacationing closer to home during inflationary times. People come from all over the world to visit the national parks and vacation destinations that are often within driving distance of our homes. Make a bucket list of regional getaways that you would like to see. Your next “thrifty” vacation may end up being one of your most enjoyable.
25. Shop for lower auto and car insurance rates. It’s amazing the money that you will save as you shop around. You may also consider raising your deductibles for additional savings. As long as you are talking to your insurance agent, check out how much your house is insured for. The recent inflation has raised the value of your home. Is your home adequately insured?
26. Don’t lapse or cancel that old life insurance policy that you no longer need…sell it. There are viatical companies that will sometimes pay top dollar for life insurance policies that no longer fit your needs. You get paid for your policy and you free yourself from having to pay future insurance premiums.
Before I end, I want to mention some developments regarding inflation that have occurred since our last blog was published. Last week our elected officials announced a student loan forgiveness program that promised to forgive the loan obligation for billions of dollars’ worth of loans. Essentially, the government will be going further in debt to pump billions of dollars into an already overheated economy. During the same week, Jerome Powell, the Federal Reserve Chairman announced a plan to aggressively raise interest rates to quell inflation.
So, our politicians are stepping on the gas pedal while the Federal Reserve is stomping on the brakes. I wish to point this out to you to help you understand that until policies in Washington D.C. are changed, higher inflation rates will be with us. So, in the short term, we are going to have to learn how to live with higher inflation rates than what we have been accustomed to. I hope the ideas I shared with you will offer a little relief.
Hang in there, this too shall pass!
If you have questions, or concerns, or would like to review your personal retirement situation, please click here to schedule a complimentary consultation. You can also click here to learn more about the Perennial Income Model mentioned above in the second fighting inflation idea.