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Don’t let inflation get you down: Tips to save and generate income in retirement

If you’ve been paying close attention to the news lately, you’ll see that most U.S. households are facing an approximate $5,200 ($433 per month) inflation tax this year compared to last year according to Bloomberg. This means that the extra savings built up over the course of the pandemic, along with increased wages, will likely cushion these costs and allow spending to expand. But for those on the sidelines, or even for retirees, they may need to join the labor force to help offset the costs.

What is inflation exactly? 

The International Monetary Fund (IMF) defines inflation as an economic measurement of how much more expensive a set of goods and services has become over a certain period of time, typically a year. A consumer’s “cost of living depends on the prices of many goods and services and the share of each in the household budget. To measure the average consumer’s cost of living, government agencies conduct household surveys to identify a basket of commonly purchased items and track over time the cost of purchasing this basket.” IMF says that housing expenses, including rent and mortgages, constitute the largest component of the consumer basket in the United States. 

The Consumer Price Index, which measures a wide-ranging basket of goods and services, jumped 7.9% in February 2022 according to the U.S. Bureau of Labor Statistics over the last 12 months. Prices are going up on everything from the food you put on the table to the gas that powers your car. 

How are Americans reacting? 

An online poll was conducted in the form of a CNBC survey from March 23-24, 2022 among a national sample of 3,953 adults. Three-quarters of the survey respondents said they’re worried that higher prices will force them to rethink their financial choices in the coming months and 48% said they constantly think about rising prices. 52% said they are under more financial stress than a year ago and most are concerned about gas prices, housing costs and food costs. In the last year, gas spiked 38%, shelter rose 4.7% and food prices increased 7.9%.

Knowing that most of us will see a jump in prices, many are reconsidering how they spend their money. Survey respondents said the first thing they’d cut is dining out followed by travel and vacations. Inflation is always a concern and as a retiree it’s important to plan for inflation in retirement. If that’s not something you’ve done, or you’re looking for alternatives, another option is to find extra avenues of income to help cope with inflation as a retiree.

Generate income in retirement

One of the positives that has come from the COVID-19 pandemic is an increased flexibility for work options including work from home opportunities, hybrid options and the growing gig economy.

Many in retirement want the flexibility of increased free time but with a good balance of keeping busy. This, coupled with the potential impact of rising inflation, might be the perfect time to considering what options you may have to take on a part-time job that fits your retirement needs and lifestyle.

Of course there are always pros and cons to working in retirement but below are a few options to consider:

  • Coaching/consulting/contract work: Working in retirement doesn’t have to mean doing something new. You might find that a lifelong career has given you a skill set and experiences that you’d like to impart to others. Scaling back to part-time or contract work could keep you in your field of choice, but with less stress and time away from leisure activities.
  • Delivery or standard driver: Delivery drivers are finding ways to make extra money on their schedules while meeting a demanding need whether that’s through Uber Eats, DoorDash or Grubhub. Transporting people as standard driver usually involves using a navigation app to get customers where they want to go via the fastest route possible. Uber and Lyft are worth checking out for opportunities to explore.
  • Substitute Teacher: Schools need substitute teachers to fill in for full-time teachers every day, and these positions don’t always require subject-specific training. This is a good job to consider if you’re available on short notice and enjoy working with children or young adults. Contact nearby school districts and ask how to apply and what requirements are involved.

For more ideas, check out 5 common part-time jobs for retirees and 7 jobs that allow you to work from home after retirement.

Consider LinkedIn to connect

Regardless of what job you might pursue in retirement to help offset inflation costs, you might want to consider joining LinkedIn which is a social network that focuses on developing professional contacts and career opportunities. You can use LinkedIn to display your resume, search for jobs and enhance your professional reputation by posting updates and connecting and interacting with other people.

Extra ways to save

In addition to the above tips to generate income and make solid connections for potential employment, you can also save money wherever possible including the following:

  • Grocery store shopping tips:
    • Make a list and stick to it so you’ll be less apt to make an impulse buy which can really cause your costs to increase.
    • Shop weekly sales especially the loss-leader items meaning the items significantly on sale in order to generate sales for the supermarket. You can find these in the weekly circular on a supermarket’s website or often mailed to your home.
    • Swap out more expensive items like meat for plant-based substitutes. Not only will your health thank you, your wallet will too.
  • Get rid of subscriptions whether that’s to magazines that you can read at your local library, Spotify and other streaming services like Hulu or subscription boxes that are fun but maybe not needed.
  • Eat at home and make your own coffee. Just making this change can add dollars back to your wallet. How much is that daily latte at your local coffee shop or that lunch or dinner our that might be happening more than it should? Maybe cut back and you can see a bit of money add up!

During any time of economic uncertainty, it’s important to maintain perspective especially during market downturns.

We’re here for you

Bankers Life is here for you! We understand the stresses and strains of inflation and the retirement planning process. Our insurance agents can answer questions, review portfolios and help create a retirement plan. Call us to get started (800) 621-3724.