Inflation is like rust, an endless, tireless gnawing at the purchasing power of your dollars.
Over half of Americans are struggling with retirement and inflation has a lot to do with it. Fixed incomes are not usually adjusted to the inflation rate or adjust at a very low historic rate.
If there are intermittent spikes in inflation, say in housing costs or food prices, seniors often take the biggest hit.
Here are two ways your retirement can survive the problem of inflation.
Social Security strategies
You may want to have supplementary income along with Social Security in retirement, but Social Security all by itself can be a handy hedge against inflation.
For one, the longer that you delay payment of your Social Security benefits, the more money will be added to your monthly benefits.
Under current law, if you delay your Social Security payments until age 70 your basic monthly benefits will are increased by more than 132%.
As long as you qualify, you will receive your Social Security benefits for as long as you live. And then your benefits can be transferred to qualified beneficiaries.
Depending on your income, you may not have to pay taxes on your benefits.
Even better than that, Social Security payments are constantly adjusted for inflation. So, when you receive your benefits your payments are not negatively affected by inflation over the years.
The Social Security Administration increases benefits accordingly whenever the cost of living expenses, or inflation, rises. Social Security has even been publicly announcing its cost-of-living adjustments, known as a COLA, since 1975.
Downsizing is the act of aggressively and strategically living below your means to stretch the money as far as possible.
That can be a good way to offset inflation in the things you absolutely must buy, like food and shelter.
One prime example of downsizing is to sell a home and move into a smaller home or into an apartment, or moving to a city or even another country with a lower cost of living.
The typical home can cost anywhere between $200,000 to $400,000. And the annual maintenance costs for homeownership can range between $9,000 to $17,000 depending on the locale.
Another way to downsize is to strictly buy generic consumer products instead of brand names. For example, if you strictly buy generic food products and groceries, you can save up to $1,000 annually on food expenses.
Create a budget to identify financial waste in your life and prioritize need over want.
The point is that if you are always living below your means and downsize your life whenever possible, inflation will have less impact on your retirement.