What to Do when Inflation Deflates your Retirement Plans

Inflation has been quite rampant over the past few months with little to no end in sight, which is causing many older employees and recent retirees to worry about whether they can continue to afford covering their daily expenses. Although Social Security is designed to provide cost of living adjustments every so often, these still often fall short.

How Inflation Affects Retirement

It’s crucial to remember that inflation has a significant impact on anyone who is seeking out a traditional retirement as well as those individuals who are keen to retire early. 

Inflation is classified as the general increase in the price of goods and services over a period of time, and while this has averaged out at around 2% per year previously, this percentage has increased substantially over the past year or two. This means the cost of everything from groceries to gas, medical care and housing will continue rising for the foreseeable future. 

Minimizing Financial Losses

Below are some steps that can be taken to help ensure that you don’t go broke after retiring:

Trim Regular Expenses wherever Possible

If your budget is already tight, any further price increases will make it almost impossible to survive from month to month. Pricing for services such as phone contracts, home internet and insurance can often be negotiated, especially if you inform your current provider that you’re considering switching to another company. 

Now is also the time to thoroughly peruse bank statements to ensure that you aren’t paying for any unused memberships or services that you may have canceled a while ago.

Change Grocery Shopping Habits

If you’ve noticed an increase in the cost of groceries and you haven’t been adding anything extra to your cart, it’s time to make a few changes. These can include switching from fresh to frozen produce, consuming smaller portions of meat products, using dried beans and lentils instead of canned or even trying alternative brands that may be more cost-effective.

Don’t Delay Large Purchases

Although this may sound counterintuitive, pricing of appliances and other household items is also increasing alarmingly. As such, you should not delay purchasing these items if you already have the funds set aside to pay for them – chances are that they could cost as much as 30% more in a few months’ time.

Work with a Reputable Financial Advisor

Another crucial step to take when protecting your retirement funds against inflation is to work closely with a reputable financial advisor. These specialists are trained to follow the markets, which allows them to make the appropriate decisions to ensure that your money can grow as much as possible. 

When searching for an investment advisor, ensure that they are suitably qualified, registered and experienced – failure to do so could result in disastrous consequences for your financial future. If you would like to find out more about securing your retirement savings against higher than average inflation rates, get in touch with our team today.

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spring break

Planning a Spring Break Vacation on a Limited Budget

If you’ve been considering taking a vacation with your family this spring, chances are that you’ve noticed just how much the cost of everything from gas to accommodation to meals has risen recently. However, this doesn’t always means that you’ll have to put your plans on hold – in fact, you can still enjoy a spring break vacation if you’re willing to make a few adjustments to your plans.

Rethink your Initially Planned Destination

While locations such as Florida, Orlando or even Cancun in Mexico are deemed as popular spring break destinations, it doesn’t mean that you have to visit one of them to have a great time. Not only will the more popular destinations be ridiculously crowded; pricing for everything from rooms to drinks and activity prices will most likely be through the roof as well. 

Instead, opt for a location that isn’t as popular with the regular spring break crowds and you’ll suddenly find that your trip will become a lot more affordable than you think.

Consider Driving to your Destination

Although it will take longer to reach your vacation spot if you’re driving, chances are that you’ll save a huge chunk of cash by doing so. In addition, you won’t have to cover the exorbitant cost of car rental at your destination either. 

If you decide to drive, you’ll also have to choose your destination accordingly – after all, you wouldn’t want to spend more than a day or two on the road there and back.

Find a Grocery Store Close to your Destination

One of the biggest expenses you’ll encounter when going on spring break vacation is the cost of meals. However, this can be drastically reduced if you’re willing to do a little of your own meal prep and purchase groceries instead of relying entirely on restaurant meals. Snacks can also be purchased this way for a fraction of the price of those being charged at hotel shops.

Find free Activities to Take Part in

Wherever possible, seek out free activities to do that are close to your chosen destination. For example, if you’ve got a great deal on a cruise, avoid visiting the casino and opt for one of the many free evening shows on offer instead. If you’re staying at a resort, be sure to check the property calendar or activity board to see if any shows or activities are available for free or low cost – many resorts also offer free movie nights or even trivia activities for guests.

Alternatively, you can take the family on a local hiking trail or even visit a local farmer’s market if you’re looking for something different to keep them occupied on your trip. 

With a little strategic planning, it is possible to enjoy an affordable spring break vacation with your family. If you would like to learn more about being able to save money each month and invest for your future, our qualified and experienced team of financial advisors will be more than happy to assist you.

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couch potato

Don’t Become a Couch Potato After Retirement

Just because you’ll be retiring from your daily job and commute, it doesn’t mean that you should spend the rest of your life sitting around doing nothing. In fact, research has confirmed that retirees who remain active will experience higher levels of satisfaction and better health than those who laze their days away in front of the TV or computer. 

If you’re looking for ways to keep busy or new activities to try after stopping work, the list below will help you get started:

Take a Hike

Spending time out in nature has been proven to be one of the best ways to de-stress and rejuvenate the body and soul. As such, this activity will make you feel better physically and emotionally. 

The good news is that it isn’t necessary to go on an overnight hike or multiple-day camping trip to enjoy these benefits – even a short hike of a few miles will be highly beneficial. It will also provide you with an opportunity to take a break from technology, which is something everyone needs from time to time.

Foster a Pet

Many retirees are hesitant to outright adopt a pet because they worry about what will happen if they’re no longer able to care for it. However, many animal shelters now offer the option of fostering a pet as well. This entails having the shelter or rescue organization cover the cost of the animal’s food and care, while the pet in question provides companionship.

Fostering a pet will help keep you physically active, especially if regular walking is required – which will benefit your health as well as that of the pet.

Join a Book Club

After retiring, it’s just as important to keep your mind active as your body. A 2016 study in the Social Science and Medicine Journal revealed that spending an hour or two reading each day can help increase a senior’s lifespan substantially as well – even more good reason to curl up on the couch with your favorite book at least a few times a week.

Learn a New Language

Learning a new language is an excellent way to ensure that your mind remains active after you’re no longer part of the workforce because it will help keep your memory and concentration skills sharp as you get older. A number of free and online options are now available for anyone who wants to learn new languages, such as Babbel and Duolingo.

Do Volunteer Work

This is by far one of the most popular ways for seniors to keep busy once they’re no longer working. Most volunteers report that getting actively involved in causes that are important to them provides a sense of fulfillment, which in turn helps make them happier. 

Keeping physically and mentally active during your golden years will not only help keep you fit and healthy; you’ll also be able to fill your days with a number of social activities that are enjoyable.

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grocery store prices

Are Rising Grocery Prices Destroying your Budget? Stretch your Meals with These Tips

Most grocery items have experienced steep increases in pricing over the past year or two, making it more difficult than ever for families to make ends meet when shopping for food – and in many cases, purchasing less food simply isn’t an option, especially for larger families. 

If you’ve been feeling the financial pinch each time you’ve been grocery shopping recently, these tips can help stretch the food you buy – which will in turn give your budget somewhat of a reprieve as well:

Keep Breakfast Cheap

Breakfast is a meal that can be kept quite simple, while still being filling and taking up the smallest part of your food budget. For instance, oatmeal, toast and eggs are among some of the cheapest foods available and they are all filling as well. Including these breakfast options will help slash your food budget substantially.

Stock Up on Low-cost Staples

Whole grains such as dried legumes; oats, rice, quinoa and millet remain inexpensive as well, despite price hikes on fresh foods and meat products. These can all be used as filler ingredients when preparing dishes containing meat, which will allow you to use less meat per meal. 

In cases where canned goods such as tuna, beans and other foods that your family eats are on sale at good prices, it’s a good idea to stock up on them – they can often be combined with the above-mentioned dry foods as well.

Freeze Leftovers Promptly

One of the most common contributors to food waste is leftover portions that get left to languish at the back of the refrigerator. Instead, these should be frozen as soon as they’re cool enough and labeled well. This will not only prevent food from being thrown away because it’s gone bad; having frozen leftovers on hand will allow you to grab a portion and reheat it for dinner on a busy night as well.

Get Into the Habit of Meal Planning

 Without a meal plan on hand, food will quickly get forgotten about – and end up being tossed. Sitting down and preparing a weekly meal plan will allow you to only purchase the items needed for those dishes you intend preparing that week. For further savings, consider planning meals around foods that are on sale each week.

Use Seasonal Produce

Although it may initially be difficult to change from your favorite fruit and veggies, focusing on using produce seasonally will shave hundreds of dollars from your grocery bill each year. Just one example is apples that will cost just a few dollars per bag during fall, and shoot up to as much as $10 per bag during summer.

Stretching ground beef with items such as lentils, rice or even quinoa will also go a long way in helping to shave the cost of your grocery bill. Implementing even one or two of these tips will see your food lasting a lot longer than usual as well. 

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Managing Depression After Retirement

Depression is one of the most prevalent mental health conditions among older adults, and a commonly made mistake in planning for retirement is not thinking about the significant emotional adjustment that takes place during this time. 

Symptoms of depression can include disturbed sleep, general sadness and a loss of interest in activities that a person used to enjoy, and these can last anywhere from weeks to a number of years – depending on whether satisfaction of life is eventually achieved or not and if an affected person has decided to seek treatment.

If you’ve been feeling depressed after stopping work and you’re unsure why, there are a few steps you can take to help address and alleviate it:

Determine why you’re Feeling Down

Several aspects can cause you to feel depressed after retirement. For example, you may think that you no longer have a sense of purpose because you’re no longer going to work each day. Alternatively, you may not be spending as much time with family and friends as you’d initially anticipated – causing you to second-guess your decision to retire. 

Spend time thinking about what could be causing you to feel depressed – it could be one or more aspects. If you’re struggling to determine the cause, consider journaling daily to track your thoughts. This will allow you to look for potential patterns or trends that may recur.

Identify Activities that you Enjoy

Along with devoting time to activities and/or hobbies you enjoy that may have been neglected during your working years, consider engaging in something new from time to time. Some ideas here include:

  • Volunteering with a charity you feel strongly about
  • Enroll in continuing education classes at a local college or even online
  • Join a senior citizen’s recreational group or sports club
  • Take up part-time employment

When deciding which activities to get involved in, consider what you need the most. Do you want to make new friends? Are you keen to feel useful somehow? Would you like to earn a little extra spending money? Would you like to engage in a little of each? The choice is yours.

Connect with Other Retirees who are Struggling to Adjust

If you’re feeling depressed after retiring, remember that you aren’t alone. There may very well be someone else in your existing social circle or network that is also struggling to adjust to the new normal of not going to work every day. 

Connecting with these people will help you support each other while dealing with the emotional and mental challenges you’re facing during your golden years. If you struggle to meet new people face to face, consider searching for retiree support groups online – these can often be just as beneficial as physical groups and activities. 

Figuring out what is most important to you during retirement and eliminating activities that may be causing you to feel depressed will go a long way in helping you to get the most out of this time of your life. Talking with a financial advisor can also help alleviate some of the financial worries you may be experiencing during retirement as well. 

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retail therapy

How much will that Retail Therapy Really Cost?

Many consumers turn to retail therapy as a means of helping them to feel better for a short while after dealing with a difficult situation. Although engaging in a little impulse spending on that new dress and shoes may pick up your spirits for a short while, the truth is that your retail therapy habit is probably costing you a lot more than you can afford to spend. 

Crunching the Numbers

A survey conducted a few years ago studied the habits of approximately 2,000 shoppers and found that the average American spends a little over $2,200 per year on these ‘pick me up’ purchases. The poll went on to note that the typical shopper purchases around 12 items per month in store and eight to 10 online, with their shopping taking up almost 90 hours a year in-store and more than 70 hours per year online. 

Most Americans have admitted that as much as 25% of their shopping is based more in pleasure than in true necessity nowadays, with more than 65% stating that shopping has therapeutic qualities for them. Around 70% of shoppers admitted having purchased something nice just to cheer themselves up, and approximately 15% of them said that they engage in retail therapy quite regularly. 

More than 70% of the survey respondents also said that they were living from paycheck to paycheck at the time, meaning that their retail therapy habit was hurting their finances severely. 

Ditching the Habit

If you regularly succumb to retail therapy and you’d like to break this habit for the sake of your finances, the tips below will help get you on the right track:

  • Identify your triggers – What causes you to go impulse shopping? A stressful day at the office? Feeling lonely? Trying to fit in with certain friends? 
  • Delete spending apps and emails – unsubscribing to emails from your favorite stores and removing shopping apps from your phone will go a long way in helping to reduce temptation substantially
  • Try a new hobby – although initial expenditure may be needed to get set up with your new hobby, it will leave less time for going impulse shopping – which will help your budget recover over time
  • Entertain at home – if you’re in the habit of heading to the mall to meet up with friends, go shopping and eat out, this will definitely hurt your budget over time. Instead, invite friends over for coffee or a meal at home. You’ll still be able to enjoy spending time together, but for a fraction of the price – and there won’t be any items tempting you in the store windows at the mall

Although there is usually no harm with engaging in a little retail therapy from time to time, it becomes problematic when your household finances start suffering as a result of this habit. A great way to ensure that you’ll still be able to treat yourself from time to time is to set aside a few dollars in your weekly or monthly budget specifically for this purpose. 

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bad credit

Bad Credit Score? Improve it with these Tips

Your credit score is probably the most important aspect of your financial health because it provides information to potential lenders regarding your level of responsibility where using credit is concerned. This means that the higher your score is, the better your chances will be for obtaining various forms of credit and/or loans. In addition, holders of higher credit scores will normally benefit from lower interest rates when borrowing money.

If you’re struggling with a low credit score, the good news is that there are steps that can be taken to improve it:

Start by Paying Down Revolving Credit Balances

If you’re able to pay more than the minimum required amounts on any outstanding balances you’re carrying, now is the time to do this. Paying more than the required amount will not only reduce the amount of interest you’ll pay over time, it will help lower your credit utilization rate as well – which will in turn improve your overall score. 

The sooner you can pay off your balance each month, the better – and once repaid in full, your credit score will usually increase again.

Don’t Miss Payments

When determining credit scores, your actual payment history will be one of the most crucial aspects that are considered. As such, having a long history of paying on time – or even early – will go a long way in helping to improve your credit score.

Aim for 30% Credit Utilization or Less

Credit utilization refers to the amount of your credit limit that’s being used at any given time and it is the second most important factor when it comes to credit score calculations. 

The easiest way to keep this ratio under control is to repay credit card balances in full each month. If this isn’t possible, your next best option is to ensure that your total outstanding balance is kept at 30% or less of your full credit limit. From there, you can start working towards getting this down to 10% or under – which will be ideal for helping to improve your credit score.

Request a Credit Limit Increase

When your credit limit is increased and your outstanding amount remains the same, it lowers your overall credit utilization virtually immediately. If your income has increased over the past year or two, you stand a fairly good chance of having your request for a credit limit increase approved – which will ultimately improve your credit score.

Check your Credit Report for Errors

Another way to increase your credit score relatively quickly is to review your credit report for any errors that could be affecting it negatively. You stand an excellent chance of increasing your score by disputing errors and having them removed as quickly as possible. 

When it comes to improving your credit score, it’s important to remember that there’s no one solution that will work for everyone. It’s also strongly recommended that you obtain copies of your credit report from the various institutions such as Experian or Equifax annually, as this will allow you to spot errors and dispute them as quickly as possible. 

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Are Social Security Benefits Sufficient to Support Retirees?

Although retirement is often referred to as the golden years, several elderly Americans certainly wouldn’t describe this time of their lives in that way.

In fact, research undertaken by the Center for Social and Demographic Research on Aging at the University of Massachusetts in Boston revealed that up to 50% of Americans over the age of 65 who live on their own and around 25% of those in two-person households simply don’t have enough money to cover even the most basic of essential each month anymore. 

Measuring Costs with the Elder Index

The Elder Index measures the basic costs that most households have to cover and how well they’re able to afford them. These costs include housing, food, transportation, health care and other basic essentials and don’t take extras into account such as vacations, eating out or entertainment. 

Amounts for the Elder Index vary according to an individual or couple’s actual situation. For those who don’t have to pay a mortgage anymore, the Elder Index is just over $21,000 per year for an individual and just under $32,000 for a couple. 

The estimates also increase for anyone who’s still renting to around $25,500 for singles and just over $36,000 for couples. Costs for seniors who still carry mortgages rise to around $32,000 for singles and a little over $42,000 for couples. This means that up to half of senior citizens simply cannot afford to cover their basic living expenses from month to month anymore. 

Determining Social Security Benefit Amounts

As of January 2022, Social Security Administration has noted that beneficiaries would be receiving a 5.9% increase in payout amounts. This is one of the largest cost of living adjustments that have ever been made to this benefit. 

The average monthly Social Security benefit for eligible single seniors will be around $1,565 per month and approximately $3,187 per month for retired couples where both spouses qualify. This equates to around $18,780 and $38,244 per year respectively, which is not nearly enough for recipients to cover basic expenses, let alone any unexpected emergencies that may crop up. 

Although Medicare benefits are available to seniors, these may not always cover all medical expenses after retiring either. 

Additional Savings are Crucial

Although it may have been possible to live exclusively on Social Security benefits a few decades ago, this is no longer the case – even for seniors who relocate to cheaper cost of living areas. As such, it’s crucial for everyone who is still working to contribute as much as they can comfortably afford towards some form of savings or retirement plans such as an IRA or 401(k).

Even small amounts saved over the course of 20 to 30 years will make a significant difference to a senior’s budget when the time comes to stop working – thanks to the power of compounding interest. If you would like ot learn more about setting aside funds towards your golden years that will allow you to do more than merely get by each month, contact our financial advisors today. 

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Why Kids Should Learn to Save as Early as Possible

Although preparing young people for a secure financial future is crucial, research has indicated that teenagers in the U.S. are woefully uninformed when it comes to saving and investing. If you have children, it may surprise you to know that kids as young as five years old have the ability to start learning about saving and investing their money.

Here are just a few reasons why it’s crucial to teach your kids about saving and investing as early as possible:

Kids are Developmentally Capable of Learning

A number of studies have indicated that most young children are developmentally capable of learning to save money – even if it’s in a physical piggy bank at home to start off with. Teaching them early will not only provide them with a hands-on mindset about saving part of the money they receive; it could also help them acquire a taste for financial planning that will remain with them into adulthood.

It will Teach them about the Value of Money

In today’s society, physical cash is being exchanged less and less – making it more challenging than ever to educate children about spending and saving. As such, it’s imperative for you to include even your youngest child in the household budgeting process because it will help them develop a basic understanding of how money-related transactions work when using debit or credit cards and online banking channels.

They can Learn about Delayed Gratification

Another reason why it’s crucial to teach young children about how money works is that it will help them to understand the concept of delayed gratification – which will go a long way in helping to ensure that they remain free from consumer debt as adults. 

Studies were performed with young children that involved offering them one piece of candy or one toy right away or two pieces of candy and additional toys if they would be willing to wait for a short while. Most of the children involved in the study opted to wait so that they could receive a better return – meaning that they fully understood the concept of not being able to have everything they wanted right away.

Set them Up for a Secure Financial Future

Educating your children about saving from a young age will also help set them up to enjoy a solid financial future – without the need to move back home due to money-related difficulties. Teaching them the concept of ‘spend, save, share’ will not only introduce a healthy attitude to any amounts of money they receive; educating them about sharing or donating to charity will in turn help raise children to become socially aware adults as well. 

One of the best ways to help teach your kids about money is to have them open their own bank account as soon as they start receiving an allowance and/or financial gifts from friends and family. If you would like additional advice regarding financial education for children, get in touch with our team today. 

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Retirement Tips

Keen to Retire Earlier than Planned? Keep these Points in Mind

Most Americans dream of being able to retire early in a convenient and comfortable living environment, surrounded by those that they care about the most. However, with so many changes that have taken place over the past few years, retirement can seem further away than ever before for many people – and some may now even think that they’ll never be able to retire because of the lack of income after doing so. 

If you intend retiring earlier than usual with a decently sized nest egg, you’ll need to keep the advice below in mind:

Establish a Plan

Several working Americans completely forget to even think about retirement. Although you may have already set up your 401(k), you may not be taking full advantage of retirement savings options that are available to you. 

These days, several online retirement tools are available to help you determine where you are with your current savings plan, as well as how far you still have to go until you reach your goal of being financially comfortable during this time of your life. 

Start by establishing goals and familiarizing yourself with your company’s retirement plans and policies as soon as possible – you may find that they’re willing to make matching contributions, which technically equates to free money towards your retirement goals. 

If you’re feeling overwhelmed at the idea of trying to set up a financial plan for your retirement, don’t hesitate to et in touch with a professional advisor for assistance.

Consider your Position in Life

The approach you take towards planning for your retirement will largely depend on your current age, income, assets you own and the age you want to be when you stop working. For instance, if you’re in your 20s or 30s and want to retire at 55, you’ll need to make aggressive contributions towards a good retirement plan. 

If you’re closer to retirement age, it’s still not too late to start working on funding your retirement> making small adjustments such as directing funds into your IRA or reducing unnecessary expenses can have a tremendous impact on retirement savings – far more than you realize.

Think Positively about your Retirement

While it may seem scary to think about the time that you’ll no longer be working, retirement will be your ultimate goal if you intend relaxing and being as comfortable as possible during this part of your life. 

You should also be thinking of retirement as your end goal instead of something unknown. While it may be the time for you to reduce living expenses, it should also be the time of your life where you no longer have to stress over a job or income.

Don’t allow daily life and an overfull schedule let you forget about putting a practical retirement plan into place. Although determining what your expenses will be during retirement is a relatively simple process, you’re welcome to get in touch with one of our financial advisors if you require assistance in this regard. 

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