Retirement costs soar amid rising prices, inflation concerns
The Social Security Administration is considering raising retirement payments next year to offset rising inflation. FOX Business’ Lydia Hu with more.
Rising inflation has caused the price of household items to climb, which has hit some Social Security beneficiaries who received a modest benefit bump this year particularly hard. But experts say there are some small ways recipients can tighten their budgets.
"In general, people who are either receiving Social Security or about to receive Social Security – or nearing the time when they may or may not make a claim on Social Security – they’re very worried about it," George Mannes, senior editor of AARP’s magazine, told FOX Business.
Mary Johnson, a Social Security and Medicare policy analyst at The Senior Citizens League, told FOX Business there are several ways seniors can tighten their budgets in order to stretch their dollars further.
The first is at the pharmacy counter. Johnson advised seniors to contact their Medicare Part D drug or Medicare Advantage plans to find out which pharmacies are "preferred" and which have the lowest co-pays or coinsurance for the specific drugs that a recipient is taking. Recipients can transfer their prescriptions to the pharmacy where the cost is lowest.
INFLATION INFLICTING NEAR-TERM PAIN, BUT PROMISES LONG-TERM GAIN FOR SENIORS
Mannes told FOX Business that seniors may want to forego their vacations this year as travel prices climb – including everything from flight fare to hotels to rental cars and gas prices.
At the grocery store, Johnson recommends reducing purchases of pricey proteins, some of which have ticked up in cost this year. And seniors can go through monthly usage plans and subscriptions to see what can be eliminated.
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In order to bring in some extra income, Mannes said seniors may want to consider downsizing their homes. Housing prices have soared due to limited inventory and increased demand, so sellers may be in a position to get a favorable deal – particularly those who are still living in a big family home in the suburbs.
Another item people may want to consider offloading is an extra vehicle. The price of used cars and trucks is up roughly 45%, Mannes noted, and selling a vehicle offers an opportunity to save on gas prices and auto insurance.
And for those who aren’t invested in the stock market, Mannes suggested looking into a balanced index fund with a 60-40 split between stocks and bonds. This is one way seniors can ensure in the long term that their money grows with inflation.
"Otherwise you’ll lose buying power year over year as prices rise and you get miniscule interest on your savings," Mannes explained.
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As previously reported by FOX Business, some relief could be on the way for Social Security beneficiaries in 2022 in the form of a higher cost of living adjustment (COLA).
The Social Security Administration uses a formula to determine what the COLA will be each year. It is based on increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers, which are calculated on a monthly basis by the Bureau of Labor Statistics.
The Senior Citizens League estimated this month that recipients could see the largest benefit bump – of 6.1% – since 1983.
This year benefits rose by just 1.3%, which is below projections for inflation.
For individuals in serious financial circumstances, the AARP Foundation has a website where people can find free or low-cost assistance on items ranging from food to housing and transportation.
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