Practical Inflation-Fighting Strategies

Earlier this year, I taught a class and a webinar about inflation where I presented dozens of ways to mitigate the effects of rising prices through reduced spending. Inflation is down significantly from 2022 but still remains elevated. Below is a list of inflation-fighting strategies to consider listed by household expense category:

 

Groceries

 

Make substitutions (e.g., applesauce for eggs in baking), buy store vs. national brands, eat more meatless meals, stock up on sale items, consider shopping at a warehouse store, eliminate high cost “junk foods,” use coupons (from online sources and newspaper ads) and double coupons.

Eating Out

Drink ice water vs. soft drinks or alcoholic beverages, share an entrée or dessert, eat appetizers as a meal, select BYOB restaurants for meals eaten with alcoholic drinks, eat out for lunch vs. dinner or “early bird specials,” and use takeout containers to bring food home for another meal.

Gasoline

Drive less by consolidating trips for errands, appointments, and work, find cheap gas with apps (e.g., GasBuddy, Waze), pay for gas with cash, join a retailer’s fuel rewards program, time your fill-ups (experts say Sunday and Monday are best), and check tire pressure and lighten loads.

Utilities

Adjust thermostat (a little warmer in summer and cooler in winter), turn down water heater to 120 degrees, unplug items not in use using a power strip, take advantage of off-peak rates, change HVAC system air filters regularly, use LED light bulbs, and use low-flow showerheads.

Clothing

Shop department store sales and use coupons, join retailer loyalty programs to earn rewards, shop at thrift and consignment stores, shop for deals online (e.g., Asos, Mango, Amazon, Zara), and make clothing repairs and alterations to extend the life of garments.

Big Ticket Items

Wait inflation out, if you can, until product inventory increases and/or interest rates and prices come down (e.g., houses, cars, computers), compare at least three product or service providers, negotiate prices with vendors, if possible, and shop around for the lowest interest rate on loans.

Insurance

Play “what if?” (e.g., I increase deductible, I change coverage) with an insurance agent, double check policy discounts you qualify for, compare at least three insurance vendors, sign up for auto-pay or online billing statements, make fewer payments per year, and maintain good credit.

In summary there are many ways to “claw back” the spending power that inflation has taken away. Try different strategies and stick with those that work for you.

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.

 

Longevity, Longevity Literacy, and Living Well in Later Life

Several months ago, in the space of one day, I attended a webinar about longevity by a financial planner, read a research report about “longevity literacy,” and attended a health education class for older adults. At the end of the day, I realized that all three of these events were interrelated.

Below are nine of my key take-aways from information that was provided about living well in later life and not running out of money during your lifetime:

Medical Advances- Many of the leading causes of death today may no longer be as prevalent in another one or two decades due to medical research advances. Older adults will need to plan what to do with 10-20 more potential years of retirement and how to make their money last.

Nursing Home Stats- The average cost of a nursing home is $8,000 per month or about $95,000 per year. Affluent older adults may choose to self-insure for this risk and low-income persons generally apply for Medicaid. People in the middle-income range might consider long-term care insurance, family support, asset liquidation/downsizing, and other planning strategies.

Social Security is Not Enough- A sobering 70% of single (50% of married) retirees get 50% or more of their income from Social Security, which was never designed to be a sole or primary revenue source and is typically inadequate. Average monthly benefit in 2023: $1,827 ($21,924 per year). Regular investing over 3-4 decades of work is essential to close future income gaps.

Save at Work- One of the best places to save for retirement is a workplace plan (e.g., 401(k) and 403(b) plans) because contributions are deducted automatically from workers’ paychecks and employers may match them, in which case, it is smart to save enough to earn the maximum employer match. If you think you can’t afford to save, start small with 1% of pay and scale up.

Solo Agers Need a Plan- Single, childless adults may have a greater opportunity to save money than married couples with children. They will not be incurring the estimated $233,610 cost to raise a child (per child). On the other hand, they may lack a strong social support system and should expect to have to pay more for care-giving services in later life.

Longevity Statistics- Average 60-year old American males live to 82 and average females live to 85. A recent study found that most Americans don’t have a good sense of how long they are likely to live in retirement, which skews perceptions of how much they need to save. Only 37% of the survey respondents knew the correct answer.

Longevity Literacy Research- The same study found that retirees with strong longevity literacy were more likely to plan and save for retirement while still working compared to those with poor longevity knowledge, and they tend to experience better outcomes in retirement.

Wellness Promotion Factors- It is not enough to live a long life. People want to be healthy also. The following actions can help do this: maintain a healthy weight, make healthy food choices, take nutritional supplements (if needed), exercise most days of the week, do not use tobacco products, control alcohol consumption, manage stress, and get regular check-ups.

Multipurpose Exercise- Research indicates that cognitively engaging exercise (e.g., line dancing, where you must learn and memorize the steps) has a stronger effect on brain health than “mindless” exercise (e.g., walking on a treadmill) that does not involve much thinking.

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.

 

Ten Benefits of Self-Employment in Later Life

 

Almost half of all U.S. workers age 65-69 are self-employed as are over two-thirds (68%) of those age 75-79. For almost four years, I have been a full-time financial education entrepreneur. For 27 years prior, Money Talk was a “side hustle.” For this post, I decided to reflect upon ten benefits of self-employment in later life that I (and other older entrepreneurs) have experienced:

Additional Income- A successful business provides additional cash beyond Social Security and other expected sources of income in later life. Net business earnings can pay living expenses or provide cash for “extras” such as travel and entertainment and home upgrades. Earning $40,000 in business income is equivalent to withdrawing 4% of a $1 million retirement portfolio.

 

Higher Social Security Benefits- This can happen in two ways. First, self-employment income  can replace low earnings from a worker’s teens or 20s in Social Security’s 35-year benefit calculation formula. Second, earning net business income may allow someone to postpone claiming Social Security beyond full retirement age and benefit from delayed retirement credits.

 

Tax Write-Off for Self-Employment Tax- On line 15 of Schedule 2 (for a 1040 form), self-employed workers can write off the deductible portion of their self-employment tax (calculated on Schedule SE), which will lower adjusted gross income (AGI), a trigger for many other taxes.

 

Tax Write Off for Health Insurance- On line 17 of Schedule 2, self-employed workers can take an “above the line” deduction for health insurance, which lowers their AGI. For older entrepreneurs, Medicare Part B and D premiums and IRMAA, for both themselves and their spouse, can be written off against net business income, effectively making Medicare “free.”

 

Tax Deductions- Tax deductions that entrepreneurs can take include continuing education, mileage, home office expenses, professional dues and certifications, and office expenses.

 

Structure, Meaning, Purpose, and Creativity- Entrepreneurship provides structure to an older adult’s day as well as the satisfaction of doing something meaningful, especially if it helps others. There is no boss to “call the shots” and fewer limits on how/when work gets done.

 

Flexibility- Many older adults who want to work in later life also crave flexibility. Self-employment provides this in spades as entrepreneurs set their own work hours and days off.

 

Back-Up Income- When older adults start a business, they often have back-up income sources such as Social Security, a pension, or an annuity. This makes entrepreneurship less risky in later life versus young entrepreneurs who may rely on a business as a primary source of income.

 

Continued Growth and Learning- Entrepreneurship requires older adults to stay mentally sharp by keeping up with the latest information in their field and with technology advances.

 

Better Mental Health- One recent study found that self-employment is negatively associated with depression among aging workers, although this relationship weakened over time. The researchers concluded there are substantial health and well-being benefits to self-employment.

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.

 

You are Being Influenced: Beware of Harmful Social Media Content

 

We are all influenced by things that we see online and social media is one of the biggest online influences. An estimated 81% of Americans say they have ever used YouTube vs. 69% for Facebook, 40% for Instagram, 28% for LinkedIn, 23% for Twitter, and 21% for TikTok.

 

According to a 2022 report by the Global Web Index, 58.4% of the world’s population uses social media and the average usage is 2 hours and 27 minutes.

 

Social media use has advantages including staying connected with friends and family, getting local and national news for free, and learning new things from respected thought leaders. It also has some downsides including time-use and privacy concerns and associations with anxiety and poor mental health. It can also connect people to do bad things and is a gold mine for scammers.

 

Below are some things to know about negative social media content to avoid being victimized:

Gateway to Fraud- A Federal Trade Commission (FTC) report notes that more than 1 in 4 people who reported losing money to fraud in 2021 said it started on social media (an ad, post or message). Those age 18-39 were more than twice as likely as older adults to report a loss.

 

Investment Scams- More than half of people who reported losses to investment scams, particularly those involving cryptocurrencies, said that they started on social media. Fraudsters often use social media to promote worthless securities and bogus investment opportunities.

 

Romance Scams- FTC data indicate that, after investment scams, romance scams are the second most profitable fraud on social media. More than a third of people who said they lost money to an online romance scam in 2021said it began on Facebook or Instagram.

QR Code Scams- QR codes, first invented in 1994, are often placed in social media posts to connect fraud victims to phony links or malware. In fact, the FBI issued a warning about QR code scams in early 2022. QR scanner apps are available to check for dangerous links.

Dark Patterns- These are tricks that make online users do things they did not mean to do. While not illegal, they can be costly and aggravating and may originate with social media. Examples include free trials that switch to a payment scheme without warning, hidden costs or random items added at checkout, and deliberate misdirection to a more expensive option.

Demographic Differences- Dark patterns with deceptive icons, buttons, and links place a particular burden on already marginalized groups (e.g., low income groups, people of color, people with poor language skills, and people with low digital literacy).

In summary, we are influenced in one way or another. The key is being aware of the different ways that social media can be used to trick or defraud people.

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.