It’s hard to imagine that anyone in the country hasn’t felt the burn of rising prices — but for one particularly vulnerable group, the dollar’s compromised buying power is especially painful.
“For seniors living on a fixed income, high inflation can be a real problem,” said Oberon Copeland, CEO of Very Informed. “Daily expenses become more and more expensive, but their incomes stay the same. This can make it difficult to stretch their Social Security checks to cover all of their costs. However, there are a few ways that seniors can make their money go further during times of high inflation.”
To learn more about what, exactly, seniors can do to keep up with rising costs, GOBankingRates asked a variety of experts to share their best tips on how to stretch those checks.
First, the Obvious: Cut Spending
There are two ways to create breathing room in budgets — earn more money or spend less of it. For Social Security recipients on shoestring budgets, there might not be a lot of excess to rein in, but if there is, that’s the best place to start.
“One way to stretch your Social Security check is to cut back on non-essential expenses,” Copeland said. “Take a close look at your budget and see where you can trim the fat. For example, you might cancel your cable subscription or eat out less often. By reducing your overall expenses, you’ll have more room in your budget to cover the essentials.”
Add Some Gravy
If it’s not possible to cut spending, you can improve your standard of living a lot by earning just a little extra income.
“If you have some extra time on your hands, you might consider taking on a part-time job or starting a small business,” Copeland said. “Any extra income can help offset the effects of inflation and make it easier to cover your costs.”
There’s a common misconception that you can’t earn income and collect benefits simultaneously, but that’s a Social Security myth.
According to the Social Security Administration, for those under full retirement age in 2023, the earnings limit is $21,240. For those reaching full retirement age this year, the limit is $56,520 in the months before you reach full retirement age. Once you’ve reached full retirement age, there is no income limit — you can still claim Social Security benefits no matter how much you earn.
Put Off Claiming for as Long as Possible
If you haven’t claimed your benefits yet and you have enough savings to get you through a period of high inflation, you’d be wise to put off collecting your benefits until prices start to fall.
“You can claim them anytime between ages 62 to 70,” said Jack Shinn, president of retirement planning firm J Shinn & Associates. “Claiming at age 70 will maximize your monthly benefit amount.”
Your benefits stop increasing at your 70th birthday whether you claim or not — but they grow every month you put off collecting before then.
“Run a timing report to show you all of your options at different times between ages 62 and 70,” Shinn said. “Claiming your Social Security benefits when the time is right offers significant opportunities to increase your lifetime earnings.”
The Social Security Administration (SSA) makes it easy with its Delayed Retirement Credits tool.
Married? Divorced? Get the Most Out of Spousal Benefits
If you are or were married, there are special considerations that can have a big impact on the size of your check.
“Make sure you understand the rules of spousal claiming, as that may have a significant effect on your monthly income during retirement,” Shinn said.
The SSA lays out the rules on its Benefits For Your Family page — and they apply to you even if you’re not still married.
“If you are a divorced spouse, you may be able to claim benefits using a divorced spouse’s working record,” Shinn said.
Look for Bright Spots in the CPI
Economists gauge inflation by measuring changes in the consumer price index (CPI). The rate they come up with is an average of goods and services scattered across the entire economy. Within the average, there are highs and lows.
Shop the lows.
“One thing to keep in mind about abstract numbers like CPI is that they don’t tell the whole story,” said Chris Motola, financial analyst with Merchant Maverick. “While the cost of everything in aggregate has gone up, individual items may not have gone up very much, and in some cases may have even deflated… When and where you’re able to substitute staples, you can save some money.”
Considering a Move? Choose Your Destination With Taxes in Mind
As a real estate professional and owner of ASAP Cash Offer, Devon Wayne has helped many clients research their next moves — and Social Security recipients can stretch their checks by moving to a state that doesn’t tax benefits.
The following states tax Social Security benefits as income:
- New Mexico
- Rhode Island
- West Virginia
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