Smart Financial Moves: Future-Proofing Your Retirement, Rising Above the COLA Crunch
In 2023, retired baby boomers saw a significant 8.7% increase in their Social Security cost-of-living adjustment (COLA), thanks to their smart financial moves.
Navigating through these challenges necessitates smart financial moves, as certain basic necessities such as food, housing, and fuel have encountered notable inflation rates, thereby putting pressure on budgets.
According to an article published by GoBankingRates, in 2023, retired baby boomers received a substantial 8.7% increase in their Social Security cost-of-living adjustment (COLA), highlighting the importance of smart financial moves.
However, this trend is expected to reverse in 2024 with a predicted 3% COLA due to declining inflation, emphasizing the need for further smart financial moves.
Some essential expenses like food, housing, and fuel have experienced above-average inflation rates, underlining the significance of smart financial moves in managing budgets.
Various proposals to address Social Security funding shortfalls include potential cuts, like changing COLA calculations, which might diminish future increases, reinforcing the importance of smart financial moves.
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To counteract the impact of a reduced COLA on retirement budgets, consider these strategies, involving smart financial moves.
According to an article published in Twitter, here are the five ways to counteract the impact of a reduced COLA on retirement budgets:
- Employ Smart Financial Moves to Trim Living Expenses: Cut down on costs to make your Social Security benefits go further. Adjust your budget by downsizing housing, minimizing purchases, economizing groceries, saving on utilities, and exploring senior discounts.
- Manage Debts with Smart Financial Moves: Assess and prioritize debt payments as inflation and higher interest rates could strain finances. Focus on high-interest debts like credit cards and loans to reduce overall interest charges and free up funds.
- Build an Emergency Fund through Smart Financial Moves: Having readily available savings becomes crucial during unexpected expenses when relying on limited Social Security income. Aim for three to six times monthly expenses in a high-yield savings account, or even a year’s worth for added security.
- Implement Smart Financial Moves to Diversify Investments: Complement your retirement accounts with diverse investments like bonds, dividend-paying stocks, annuities, or rental properties. Consult a financial advisor to understand the risk and returns associated with each option.
- Explore Employment Options with Smart Financial Moves: Taking up part-time jobs, remote work, or freelancing can mitigate the impact of a smaller COLA. Be cautious of potential reductions in Social Security benefits or taxation due to additional income. Delaying Social Security applications until full retirement age can also prevent benefit reductions from early retirement.
In anticipation of these changes, employing these Smart Financial Moves can help retirees adapt to the evolving financial landscape and secure their financial well-being.