If you’re a baby boomer, you may be doing this and losing money in retirement

The Senior Citizens League (SCL), a senior rights organization, has warned that the annual Cost-of-Living Adjustment (COLA) applied to Social Security benefits does not fully prevent losses in purchasing power caused by inflation. This year, retirees saw their Social Security payments increase in value by 2.5 percent.

“The average payment for retired workers in 2024 is worth only about 80 cents on the dollar compared to 2010,” reported the SCL in its 2024 Buying Power report. To make up for this loss in purchasing power, the SCL argued that “the average benefit would need to be $2,230.46,” whereas the 2024 average never surpassed $2,000.

Beyond these shortcomings, other factors contribute to financial stress for retirees, many of whom live on a fixed income with limited opportunities to generate additional earnings. As Baby Boomers—the country’s largest generation—continue to retire, they may encounter these financial challenges. While some issues have no easy solution, others can be mitigated with careful planning.

The importance of planning for retirement early while staying flexible

As retirement approaches, setting a realistic budget is critical. Most retirees will have a lower income than they did while working. For many, this shift in monthly budgeting can feel daunting, requiring careful planning and lifestyle adjustments. However, one major factor remains within your control: when you retire. Staying in the workforce for a few more years can significantly increase your retirement income and provide greater financial security.

That said, this may not apply to everyone. Some workers have substantial retirement savings, making it unnecessary to work until full retirement age. Unfortunately, not all workers have access to private retirement accounts like IRAs or 401(k)s, leaving them reliant on Social Security. As a result, they have far less flexibility in choosing the most financially advantageous time to retire.

And the planning does not end there. Even upon retiring, as the most recent period of high inflation has shown, rethinking your budget might be necessary from time to time as economic conditions change. Nevertheless, given that year after year, many retirees see their purchasing power decrease, creating breathing room in a budget can start to be an impossible task as those with mounting credit card debt can explain.

Credit card debt among older Americans is growing

As inflation continues to drive up prices, particularly for groceries and housing, many retirees are relying more heavily on credit cards. However, carrying a balance can deepen financial troubles, especially with today’s high interest rates.

According to the latest data from the Federal Reserve Bank of New York, debt among people aged 60 and older grew by approximately 27% between 2019 and 2024. This age group now owes around $4.16 trillion, with credit card debt accounting for 8.7% of that total. Since 2019, serious debt delinquency—defined as payments overdue by at least 90 days—has risen from 8.6% to 10.59%.

Seniors don’t need a reminder that carrying a credit card balance is risky. The rising number of older adults with debt underscores the increasing financial pressure on this group.

Consult a fiduciary before making major financial moves

Financial stress can make retirees with stock market investments nervous, particularly during uncertain economic times like the present. Before making changes to your investments, consult a financial expert with fiduciary responsibilities. A fiduciary is legally required to act in your best interest rather than prioritizing a bank’s profits.

While pulling money out of the stock market may seem like a safe move in the short run, a fiduciary can help you understand the potential risks, costs, and long-term benefits before making a decision.

Get your game on! Whether you’re into NFL touchdowns, NBA buzzer-beaters, world-class soccer goals, or MLB home runs, our app has it all. Dive into live coverage, expert insights, breaking news, exclusive videos, and more – plus, stay updated on the latest in current affairs and entertainment. Download now for all-access coverage, right at your fingertips – anytime, anywhere.