Here’s how older Americans can manage with higher living costs.
- Many retirees have to limit their spending due to financial constraints.
- With inflation soaring, here are some ways retirees can buy themselves more near-term flexibility.
It’s no secret that living costs have soared across the board since mid-2021 thanks to rampant inflation. While those rising costs should taper off eventually, right now, everything from gas to groceries to utilities is more expensive than usual.
As much as inflation may be wreaking havoc on workers’ budgets, it could be causing retirees a world of stress. Retirees are often limited to a fixed income — one that revolves around Social Security benefits, which don’t always pay so generously. And many retirees don’t have much wiggle room in their budgets for when living costs rise.
If you’re a retiree who’s struggling to keep up with higher costs, you’re in good company. Here are three moves you can make to survive this period of rising prices.
1. Increase your IRA or 401(k) withdrawals temporarily
It’s important to remove money from your retirement savings in a fairly conservative fashion so you don’t deplete your nest egg prematurely. But given the way living costs have skyrocketed, it’s not unreasonable to temporarily increase your IRA or 401(k) withdrawal rate. If you normally remove $400 a month from your retirement plan to supplement your Social Security income, you might consider increasing those withdrawals to $500 or $600 until living costs creep back downward.
2. Tap your home equity
If you own a home, there’s a good chance you have a fair amount of equity in it. Home equity levels are up on a national level, so even if you haven’t yet managed to pay off your mortgage, you might still have the opportunity to take out a home equity loan and give yourself access to cash you can use to cover living expenses. While you’ll have to repay that loan over time, interest rates for home equity loans can be reasonable, making them a fairly affordable option.
3. Get a part-time job
Many people look forward to retirement so they can stop working. But if you’re struggling to make ends meet due to rising living costs, you may have to compromise by working a few hours a week.
The good news, though, is that working part-time doesn’t …….