Inflation is a genuine concern for millions of adults. It’s important to know that Social Security and your investment portfolio may not fully pay for your retirement needs, but there are some things to ensure it’s not derailed by inflation.

This article will cover a handful of possibilities:

1. Move some of your retirement funds into a Roth IRA
2. Delay taking Social Security benefits until age 70
3. Downsize in retirement
4. Get smart about your Medicare and health insurance coverage choices
5. Have a fee-only financial planner in Greenville, SC; take a look at your portfolio to get a second opinion on your retirement standing

Your retirement needs may not be fully paid for by Social Security, and your investment portfolio

Social Security alone doesn’t cover the cost of retirement expenses for many people retiring in Greenville, SC. Are you one of them? The average monthly benefit of Social Security is $1,657; however, this number will vary depending on when you opt-in to receive benefits. 

If you have a more expensive lifestyle than the average retiree, or if inflation rises substantially during your lifetime, it’s time to work with advocate advisors at Global View.

It’s important to note that Social Security benefits are not indexed for inflation and therefore do not keep up with rising costs over time. They do increase by cost-of-living adjustments (COLAs), but these increases tend to be modest compared with increases in healthcare premiums and other expenses associated with aging. 

The maximum amount of income subject to Social Security taxes is $147,000 in 2022; however, the average retired worker only collects around $1700/month ($22,000 annually). Therefore, it’s possible that even though your income level exceeds this threshold, you may still qualify for certain credits and deductions that can bring down what you owe Uncle Sam each year.

Consider moving some of your retirement funds into a Roth IRA

It will be worth your while to talk with fee-only investment advisors in Greenville, SC, about possibly moving some of your retirement funds into a Roth IRA. This type of investment account allows for tax-free withdrawals in retirement. You make contributions with post-tax money, so there are no tax implications when you withdraw from the account. 

Because after-tax dollars fund it, there's no immediate benefit to contributing to a Roth as opposed to contributing to other types of IRAs. The significant advantage comes when it comes time for withdrawal. Because you've already paid taxes on the income used for contributions, there's no need to pay taxes again when withdrawing funds from the account during retirement (although there will be penalties if those withdrawals occur before age 59½).

Can you delay taking Social Security benefits until age 70?

If you can delay taking SS benefits until age 70, you will get a larger monthly benefit. However, there are many factors to consider before deciding to do so:

1. Do you have other income sources? If so, then this may not be a factor for you.
2. Is your health compromised? If so, this could be another reason not to wait for your full retirement age (or later).
3. When will it make financial sense for me to take my Social Security benefits at age 70? This can vary depending on your unique situation and the resources available (i.e., savings).

Consider downsizing in retirement

With the average cost of a new home rising, it might be time to downsize by moving to a smaller home or condo. Remember that downsizing may also mean moving to a smaller community. If you decide to move into something smaller, don't forget the costs associated with selling your current residence and buying a new one.

 Additionally, if you want your retirement savings accounts to last through another economic downturn without experiencing inflation-induced losses or withdrawals from your principal assets, consider creating an emergency fund of liquid assets such as cash and CDs (certificates of deposit). This way, you can avoid drawing down your investments when stock prices and interest rates are low. Knowing that the Fed controls interest rates, they won’t stay the same 24/7, so work with a fiduciary financial planner to make the best choice to support your retirement goals.

Get smart about your Medicare and health insurance coverage choices

If you’re 65 or older, Medicare is a federal health insurance program that covers most of your medical expenses. If you have a disability, Medicare also helps cover some of your home and personal care needs. If you’re still working at age 65, you may be eligible for Medicare Part A (hospital insurance) and Part B (medical insurance). 

Read: How Inflation Affects Social Security, Medicare, and Taxes

Talk to a fee-only financial planner at Global View

Take the time to share your financial goals with CERTIFIED FINANCIAL PLANNERS™ in Greenville, SC, to get unbiased financial advice.

• As a fiduciary duty, our fee-only advisors work with your best interest in mind, which avoids any potential conflicts of interest
• We have served as personal financial advisors in South Carolina and North Carolina since 2004
• As part of our commitment to you, we focus on worry-free portfolio and wealth management, and financial planning to help you set the right path for retirement

The bottom line is that you need to consider your retirement plan's inflation risk. If you don’t, you risk falling short on the income or assets needed to support your lifestyle in retirement. 

Talk to a fee-only financial planner at Global View today about how we can help ensure that doesn’t happen!