If you don’t know that the inflation rate has been skyrocketing these past several weeks, you have been living under a large and deeply buried rock. We’ve barely escaped the Covid virus threat, and now we face another danger as a society. So how do we deal with inflation?
As a senior who might probably be retired already, how would you deal with the fact that your money can’t buy the same things it once did? This post seeks helpful tips on how to stretch your money to at least make ends meet. Let’s get started!
How Bad is Inflation These Days?
In January alone, inflation rose by 7.5%, which broke the record for the past forty years. The inflation affected several critical living components – housing, transportation, electricity, food, etc. Inflation in any category is terrible news for everyone, but it is more so for seniors and retirees with a fixed income source.
Social Security checks increased by 5.9% as an adjustment for the cost of living, but that increase does not cover the inflation rise. So no matter how you look at it, the growth of inflation in the past several weeks is just bad news.
Why did the Cost of Living Increase Dramatically?
Several reasons affect inflation. But the rise in the cost of living in the past weeks can be due to causes we can pinpoint.
The higher the demand and the lower the supply, the higher items cost – that is a standard business fact. The pandemic of the past few years created supply shortages and strengthened consumer demand. This dynamic might have played a hand in the current inflation rate.
Another possible reason is the Ukraine-Russia conflict. About 40% of Europe depends on Russia for oil. With all the sanctions imposed on Russia, accessing that oil becomes problematic. The increased demand for oil affected other cost of living items and rising inflation rates.
Whatever the reason is, inflation is a concern. Every time you go to the grocery store or try to fill the car, you will groan at the increased prices.
How to Deal with Inflation?
Whether you are a retiree or not, these four tips on dealing with inflation will come in handy.
Review Your Finance Plans
Every time a change affects our finances, we should review every plan involving the green. For example, when you planned your retirement and created a monthly budget, you probably did not factor in the double-digit rise in inflation. You might have considered inflation, but not at the rate it is today.
You need to review your plans again and re-do the numbers you did. Then, you must re-evaluate your retirement funds and income. Do you have enough cash to live comfortably indefinitely?
If you receive Social Security but don’t have a pension, you must ensure enough cash as a supplement. Inflation makes the market volatile and more likely to burst. As a result, living off interest will be more difficult; you need to create cash to supplement what you receive.
Working with a financial advisor is highly recommendable. When was the last time you reviewed your finances? It is already outdated if you did so at least two or three years ago. The reason is the financial horizon has changed so much in the past two years.
For the past five decades, inflation has been at a steady rate of 2.5%; in the last 25 years, it was around 1.85%. Now we’re facing five times that. So you have to review your finances.
Review Your Investments and Holdings
Fixed income is heavily influenced by interest rates, which fluctuate with inflation. As a result, a fixed income may be too unpredictable; you might need something that will predictably provide you with enough funds regularly.
You might not be able to keep up with the pace of inflation with whatever bonds and cash you might have right now. So you need to update your source of income to keep pace with the rising costs of living.
Evaluate Your Debts
Are there debts you are still paying off? If so, are their interest rates adjustable or fixed? If you have debts with flexible rates, it is best to try to pay them off soon or at least change them to a fixed interest rate, if possible. Adjustable interest rates may increase as inflation rises; higher interest rates will hurt your bank accounts the longer you need to keep paying them. In these fiscally unpredictable times, paying off any debt is a top priority.
Don’t make rash decisions based on the numbers you see on the news. It’s best to keep a level head as times become more complex. Overreacting can easily result in bad financial decisions that will sink you lower than the rising costs.
If you are uneducated on handling your finances, hiring a financial advisor may be worth a portion of your funds. The goal is to make sound financial decisions; if you have to spend a bit to save up on more, that might be good for you in the long run.
If Necessary, Work
We at Infinite Love Homecare recently posted an article about how to get work as a senior. In these unpredictable times, employment may be a wise decision. However, you should not be afraid to take it head-on if necessary. However, seeking employment may be an overreaction if it is impractical. You have to ensure that it is necessary and well within your means. Are you capable of working and earning an income?
Fewer Things to Think About
Dealing with inflation requires a great deal of thought. But on the other hand, Infinite Love Homecare offers services that will help your mind be at ease. We provide senior home care services such as light housekeeping, meal preparation, grocery shopping, transportation, doctor appointments, medication reminder, and more. In addition, we offer these services at affordable prices.
Reach out to infinite Love Homecare for a free in-home consultation. You can contact us by phone at (949)-529-4130 or the form on our Contact Us page. You can find us at City Tower 333 City Blvd. West Suite 1700, Orange, CA 92868.