With the cost of milk rising to an average of $3.56 per gallon, Atlantans are feeling the pull of inflation. The rising costs of goods and services are making finances even harder on retirees who depend on a fixed income.
Investing in real estate
According to U.S. News & World Report, owning real estate is a good way to keep up with the rising inflation rate, as real estate accrues wealth over time.
Real Estate Investment Trusts are companies that own commercial real estate and should be considered when evaluating your fixed income. REITs have a greater diversification, can provide larger overall returns and are generally low risk, according to Investopedia. According to CNBC, REITs do well in inflation, as property prices rise with the inflation rate.
Adjusting your retirement plan
Many financial advisors account for inflation when putting together retirement plans.
Including inflation in your retirement plan is a surefire way to make sure you are comfortable even as rates increase. Kiplinger recommends making adjustments in your plan for inflation spikes that will impact your short-term budget.
When making your plan, assume a long-term inflation rate. Spikes in inflation may be hard to predict, but they are usually are short-term. Long-term inflation rates tend to stay around 2%.
There are a few things you can do to manage your expenses during inflation spikes. You could defer payments that are affected by price hikes and use liquid savings rather than retirement to cover payments that you cannot defer. If you expect the hikes to continue, you can make adjustment to your financial plan.
Social security payments are adjusted annually with inflation. There is a huge financial incentive to wait until 70 to begin receiving payments. At that age, you can make the most out of your benefits. The longer you wait, the more your Social Security payment will be.
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