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Survey: A growing number of retired people are spending more than they can afford. Here’s how you can save for retirement

According to a survey by the Employee Benefit Research Institute, (EBRI), a growing number of retired people are living beyond their means in this year’s financial year.

According to the Spending in Retirement Survey, more than 25% of retired people are spending “much higher or a lot less than they can afford” by 2022. This is an increase of 17% from 2020.

Since 2020, more retirees reported that they have increased their spending. 27% of respondents reported that they had increased their essential spending while 12% said they had increased their discretionary spending. This is an increase from 2020 when 23% of respondents reported that they had increased their essential spending, while 12% reported that they had increased their discretionary spending.

According to the survey, 46% said that they had decreased their discretionary or essential spending in the past year. 87% of those surveyed said they were concerned about inflation and cut back. This was the most common reason given in the survey.

“Inflation appears as a major driver for the misalignment among expectations and reality,” Bridget Bearden Ph.D., EBRI’s research and development strategist, stated in a statement.

For 2023, Social Security beneficiaries will receive a COLA increase

A majority of the EBRI respondents said that Social Security was a significant source of retirement income. This income is expected to increase in the coming year.

In October, the Social Security Administration (SSA), announced that Social Security beneficiaries will receive an 8.7% increase in their benefits. This equates to an average monthly boost of $140. The announcement was made in 2023. This will affect approximately 70 million Americans.

The cost-of-living adjustment (COLA), which is the highest since 1981, was determined by inflation levels, especially the Consumer Price Index. According to the Bureau of Labor Statistics, the CPI rose by 8.2% annually in September according to BLS. The CPI increased 7.7% annually in October after a slight slowdown.

Although it may seem like a raise, the COLA increase is intended to help retirees keep pace with inflation, Kelly LaVigne (Allianz Life vice president for consumer insights) stated in a statement.

Lavigne stated that miscalculating the amount you can rely on Social Security benefits could hurt your financial well-being throughout retirement.

There are other ways to save for retirement

These tips are for retirees who don’t want to spend more than they can afford and still live comfortably.

Reduce housing costs

According to the EBRI survey, housing costs account for the highest percentage of monthly spending among retirees. Respondents estimated that they spend 30% of their income on housing.

According to U.S. News & World Report, there are many ways retirees can lower their housing costs. According to the outlet, retirees who live in smaller homes are more likely to save money on their utility bills.

Renting out a room, basement apartment, or storage space can help you reduce housing costs. You also have the option to rent out storage space in your shed or garage. Or, you could lower landscaping costs by having a low-maintenance garden.

Refinancing your mortgage could also be a good idea, but only if you end up saving money over the long term. This usually means that your interest rate will be lowered by at least 1 percent. Also, consider closing costs.

Senior discounts available – even on insurance

According to U.S. News & World Report, another way that retirees can save money on their insurance is to check if they are eligible for senior discounts.

Although many places offer discounts for seniors, not all of them are publicized.

Senior drivers may also be able to ask about discounts on their auto insurance policy. Many providers offer discounts such as low-mileage discounts or safe driving discounts. They also offer discounts for taking additional driving lessons.

Repay high-interest credit card debt

According to the EBRI survey, credit card debt was the most prevalent type of debt that retirees have. Respondents reported that 40% of them had outstanding credit card debt.

Retirees who have high-interest credit card debt might want to consolidate it or pay it off with an interest-only personal loan.

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