Managing Inflation Risk for Seniors
Much like late in the first decade of the 2000s, we are in a period of some financial instability, which can make people close to retirement age a bit nervous.
Now, while the stock market is at record levels, we are also dealing with inflation that hasn’t been seen in 40 years.
But understanding inflation risk can allow you to then manage your investments and retirement accounts more effectively.
Before we begin, inflation risk is defined as the danger of your money losing its purchasing power over time.
Now that you know what it is, Centers Health Care has four ways you can manage your inflation risk in these times. Since everyone’s portfolio and goals are different, however, you should consult a financial advisor before making any changes to your investments or retirement plan.
- Aggressively Risk Some Money
You don’t want to be aggressive with your entire nest egg, but experts recommend that you have a portion of your retirement savings in options that can outpace inflation. This way, some of your money is growing at a faster rate to indicate true growth.
- Choose Options That Keep Pace With Inflation
If you’re sitting on a pile of cash or having it in traditional savings accounts, you’re money is losing its value. Two options that are designed to keep pace with inflation are Treasure Inflation-Protected Securities (TIPS) and Series I savings bonds.
- Examine Your Living Expenses
Just because you are either close to retiring or retired doesn’t mean that your budget couldn’t use a once-over. Even with the current high pace of inflation, if you can knock 5% or even 10% off your monthly expenses by making some cost-of-living changes, you’ve negated your inflation risk right there.
- Delay Claiming Social Security
If you’re able to financially, delay claiming your Social Security benefits until the age of 70. Each year you wait from full retirement age to claim benefits, your monthly payment can go up by as much as 8%. But don’t delay past 70, as these increases stop at that age.
