There’s no denying that paying the bills these days is getting harder and harder. It’s especially hard if you’re retired and living on a fixed income. That means, retirees have had to look for other financial tools to support their investment and retirement portfolio.
One of those tools is a reverse mortgage. Since inflation began skyrocketing in 2021 and shows no sign of letting up now that the U.S. is largely financing a war in Europe, paying off student debt, and dealing with a bill called the Inflation Reduction Act that actually raises the inflation rate, retirees have been flocking to the reverse mortgage option.
If you’re 62 or older and have owned your family home for decades, you can apply for a reverse mortgage. If approved, you can tap into the equity in your home and potentially receive hundreds of thousands of dollars in proceeds.
You can take your money in one lump sum payment or equal monthly disbursements. What’s even better, is you need never pay the loan back until you die, or you move out of your home. To find out how much of a reverse mortgage you qualify for, you can use this online calculator: https://reverse.mortgage/calculator.
But what are some other facts you should know about fighting inflation in 2022 and 2023? According to a recent report by U.S. News and World Report, you should initially take a real good look at your present expenses and figure out a viable way to get you and your family through these difficult times.
U.S. News states that back in January of 2022, the adjustment to Social Security hit nearly 6 percent which was the highest recorded hike in four decades. The spike was due to the rapidly rising costs of services and goods. With the surging prices in housing, gas, supermarket shelves, and elsewhere, the cost-of-living adjustment was put into place so that retired seniors could better support themselves.
Social Security is helpful. But it doesn’t nearly cover all the costs associated with living on a fixed incomes in retirement when inflation is compounding due primarily to questionable decisions put into place by the present presidential administration, including financing the Ukraine War, the Inflation Reduction act which gives billions to green initiatives, the student loan payback program, and presidential order mandated energy dependency. All these things cost money the U.S. simply does not have.
However, here are some things you can do to fight back against inflation in 2022 and 2023:
- Conduct a thorough budget analysis
- Go over your spending patterns.
- Stop spending on major purchases.
- Use cash whenever possible.
- Rather than take out a reverse mortgage, think about relocating to a less expensive state like Florida.
- Keep your eye on your investment portfolio.
U.S. New suggests you don’t look at credit and bank statements from the past two weeks. Rather, examine spending patterns from the last six months or, at the very least, the last quarter. Make a detailed list of all your expenditures.
According to a certified financial planner in Arizona, the further back in time you go the better off you’ll be since you will have all the data you need to make an accurate assessment of your monthly spending habits. You can see clearly if you’ve been spending too much in recent weeks and months which, in the end, will give you a real idea of how much inflation is hurting you in the pocketbook.
Take a good look at fixed and variable expenses. Your fixed costs are the utilities, phone bill, mortgage or rent, cable, and insurances. The variable cost items are the ones that can change overnight like gas, food, eating out, clothing, hobbies, alcohol, and more.
If you add up your variable and fixed costs from the last month alone, then subtract them from your monthly allotted income and the number is negative, it means you’re in trouble since you’re running at a financial deficit. But if the number comes out in the positive, you’re running your household at a surplus.
If your budget is running in the red, your first act will be to cut back on variable expenses. This includes postponing vacations until prices are more reasonable. See what you can legitimately reduce or cut out altogether. If you end up having extra money left over at the end of the month, either place it in your savings, or use it to pay off a portion of your credit card debt.
You must also cut back on luxury items such as remodeling your kitchen or building that man cave you’ve always dreamed about. Right now, during a time of the highest inflation in four decades, you need to put most of your extra money toward day-to-day expenses, just to get by.
In the future, if the U.S. government puts an end to unnecessary spending and becomes energy independent again (and a net exporter), inflation will end. Until then, it’s a matter of financial survival which means keeping an eye on every penny.
