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Regarding expenses, retirees are particularly vulnerable to the impacts of higher costs. With fixed or limited income, the threats and implementation of tariffs plus the effect of years of relatively high inflation rates has taken their toll.
If you’re already feeling stretched at the checkout aisle, the problems are likely to get worse and here’s what you need to do to prepare.
Invest in Inflation Resistant Assets
When you put your money in a high-yield savings account, you may get a reasonable interest rate, but it often lags behind inflation. This is fine for short-term funds, as you still want the liquidity, but for those assets you need in the next few years, it’s often better to put them into assets that are less impacted by inflation.
Treasury Inflation-Protected Securities, or TIPS, are a great asset that is designed for this purpose. The principal of a TIPS can go up or down during the term, and it does so in response to inflation. If, at maturity, the principal is higher than the original amount, then you get the higher number. If it’s lower or equal, you get the original amount. It’s designed to be protection against inflation.
Alternatively, you can invest in similar assets that pay dividends or hold commodities. These all potentially go up in value during a period of higher inflation.
Delay Major Purchases
The uncertainty of tariffs, especially when they are threatened one week and withdrawn the next, means it may make sense to delay major purchases until the uncertainty passes.
If you can avoid purchasing items that have high tariffs, you may find that you’ll pay far less once the tariff standoff ends.
Buy Second Hand
Buying used has long been a fantastic strategy to save money and one benefit of buying used is that it’s not impacted by tariffs. You can take advantage of marketplaces like Facebook Marketplace and eBay to find gently used goods from reputable sellers. Oftentimes, you can even find new products, which are sometimes sourced from local clearance aisles.
Use Senior Discounts & Tax Breaks
If you’re a senior, take advantage of the discounts you can get from various stores and restaurants. If you’re going to be spending your money there, let them take care of you with a little discount.
While anyone at any age can join AARP, seniors may be able to maximize its benefits.
There may also be tax breaks available to you because of your age. These are designed to help fixed-income retirees during a time when everyday costs have gone up so much. For example, in Maryland, you can get a Senior Tax Credit on your property taxes if you meet certain household income criteria.
Consider Moving to a Friendlier State
If you live in a state that is a little less friendly towards seniors, such as those who tax at higher rates, consider moving to a tax-friendly state to lower your costs. Consider a state that doesn’t have an income tax or one that doesn’t tax retirement income, such as Florida.
While I would never suggest you let taxes lead the way in any moving decision, if you were considering moving, then I’d take taxes into consideration.