An Increase In Social Security Checks Can’t Come Soon Enough, Retirement Expert Says
As inflation roars, older Americans on fixed incomes struggle to find more ways to cut back on spending, although help could be coming their way – eventually.
That’s because the Social Security cost-of-living adjustment (COLA) for 2023 could be as high as 10.5 percent, the largest increase since 1981, according to the Senior Citizens League.
Such a double-digit adjustment is sorely needed for retirees who, like everyone else, face higher prices at the supermarket, the gas station and everywhere else they spend money, says Chris Orestis, president of Retirement Genius (www.retirementgenius.com) and an authority on retirement planning, long-term care and financial health.
“And unlike younger people, retired Americans often are living off savings that they may need to make last for decades,” Orestis says. “That’s hard to do when the $100 you used to spend on a trip to the supermarket doesn’t fill up your cart the way it once did.”
Even though 2022 provided Social Security recipients with one of their largest cost-of-living increases in years – 5.9 percent – that only helped so much, Orestis says.
For one thing, there was a lot of catching up to do. In the 11 years prior to 2022, those cost-of-living adjustments averaged 1.6 percent, and in two of those years there was no adjustment at all. Inflation during that 11-year period averaged about 2 percent annually
Meanwhile, inflation in 2022 has hit 9.1% which is levels the nation hasn’t seen in 40 years, largely wiping out that COLA.
With no end to rising costs in sight, Orestis suggests a few ways older Americans can continue to battle inflation:
Adjust spending habits – even more. Many older Americans probably already have tried to cut expenses, perhaps dining out less, taking shorter trips for vacation, or forgoing a night at the movies in favor of a night in front of the television. But Orestis says some people will need to keep chipping away at those expenses, trying to eliminate any waste they can find and searching for less expensive options when they do make purchases. It’s worthwhile for seniors to sit down and write out all their expenses, Orestis says. That will give them a firmer grip on where their money is going and what they might be able to do to curtail expenses.
Take a critical look at those credit cards. Few things eat away at a personal budget the way credit card debt does. Orestis says seniors who keep a large balance on those cards should try to find ways to reduce their debt and the interest that comes along with it. In some cases people could be paying hundreds of dollars a month just in interest, money that would be much better used on food, medicine, other necessities and even an occasional luxury, he says. Once the debt is paid down, he says, limit use of the card to amounts that can be paid off at the end of the month so the balance doesn’t start growing again.
Delay retirement or consider going back to work. If you can delay retirement another year or so, consider doing that until things get back to normal. If you are already retired, some seniors may want to think about taking on at least some part-time hours to supplement their income, Orestis says. Not everyone is healthy enough to return to the workforce, but it might be made easier these days with so many companies switching to remote work for at least some employees.
Don’t forget to ask about senior discounts. Plenty of businesses – restaurants, hair stylists, movie theaters and others – offer a discount for seniors. But Orestis says many people don’t take advantage of these price cuts. Maybe it just doesn’t occur to them. Maybe they think they aren’t yet old enough. Even if a senior discount isn’t advertised, he recommends asking because those discounts often are available and at younger ages than some people might imagine. A discount might apply at 50, 55, 60 or 65, depending on the establishment. Membership in the AARP, for example, starts at age 50, and that comes with its own discounts. In inflationary times, Orestis says, every 5 or 10 percent price reduction helps.
“Fighting the effects of inflation is no easy task for seniors even in normal circumstances, much less with the skyrocketing inflation we are seeing right now,” Orestis says. “But with the right moves, they can at least limit the amount of damage it does to their monthly budgets.”