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.