You have numerous aspirations for retirement — exploring new places, taking up fresh hobbies, and spending quality time with loved ones. However, to achieve these goalsandensure a pleasant and safe way of living, you mustsafeguard your buying ability during retirement.
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Purchasing power is basically what it implies: the worth, or ability to buy, of your set retirement income when considering inflation. If your income remains unchanged but prices increase by a factor of two, yourpurchasing poweris divided in two — not a desirable situation.
To assist you in learning how to maintain your buying power — even in today's unpredictable economic environment — Healthy Urvival spoke withfinancial experts.
Generating additional income doesn't have to be complicated.You may begin this week.
1. Strategize Effectively for Tax Obligations
For Nicolette Davicino, CFP, EA, financial planner atArmstrong, Fleming & Moore,One of the smartest steps seniors can take is steering clear of unexpected tax issues. This involves looking at all sources of income — even if they aren't receiving a regular salary.
“Drawing from Roth IRAsor taxable accounts during years with lower income, and converting traditional IRAs to Roth IRAs before required minimum distributions start, are effective methods for maintaining lower taxable income over time," she stated.
Davicino also encourages retirees to think about the implementation of the "Big Beautiful Bill" (also known as the One Big Beautiful Bill Act) influences tax regulations. Although Social Security is not completely tax-exempt, the majority of retirees with limited incomes—combining Social Security benefits and mandatory IRA distributions—will pay minimal or no federal taxes due to a new senior deduction.
For retirees with higher incomes who surpass the phaseout limit,smart tax planningbecomes crucial," she said. "Approaches such as capital gains harvesting, postponing Social Security, and managing the timing of distributions can assist in boosting income and minimizing tax liability.
She mentioned that retirees should frequently examine theirinvestment portfolioto make sure it matches evolving financial requirements.
"For instance, interest from municipal bonds is typically free from federal income tax, serving as a useful method for maintaining buying power during retirement," she stated.
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2. Identify Sources of Stable Income
As per Tom Buckingham, chief growth officer atNassau Financial GroupToday's retirement is vastly different from that of earlier generations.
Older adults are living longer and encountering more volatile financial markets, which means their money management approaches must extend beyond just protecting their savings — they must focus on securing consistent income over time.
If you're looking to increase your income during retirement, think about postponing fixed sources such as Social Security andfixed indexed annuities," he said. "Delaying can boost future returns and, if done properly, can offer greater adaptability."
Retirees worried about rising prices may want to look into fixed indexed annuities that include cost-of-living increases, which can help maintain buying capacity.
"In essence, you're transforming extended lifespans into financial power — rather than a threat," he stated.
3. Plan for Medical Expenses
Living longer offers advantages — extra time to add to your ever-growing stack of books to read — but retirees must prepare for rising medical and extended care expenses that typically accompany a longer lifespan.
Aaron Razon, a financial expert specializing in personal finance atCouponsnake, suggests exploring health and extended care insurance alternatives.
Allocating funds towards health insurance and evaluatinglong-term care insuranceare some of the most efficient methods to organize your healthcare requirements during retirement," he stated. "This strategy can help you manage increasing medical expenses and guarantee that you consistently have access to high-quality healthcare when necessary."
4. Explore Alternative Investments
Numerous retirees are encouraged to focus on generating income through investments during their retirement years — preferably before retiring, allowing them to take advantage of compound growth.
Along with conventional stocks and bonds, Jeff Herman, founder and investment advisor atThe Jeffrey Group, suggests exploring alternative investments for adaptable, uncorrelated income streams.
“Consider the role of alternative investments, which can offer reliable cash flow outside of conventional stocks and bonds — particularly when unexpected expenses arise," he stated. "Retirees should realize that maintaining a steady income stream is more crucial than focusing on portfolio expansion."
5. Stress-Test Your Plan
Herman also advises retirees to "shock-proof" their strategies by evaluating various situations — such as a 75% increase in medical costs or a major drop in the stock market — to ensure their retirement income remains stable.
"What enhances buying power? Maintaining a variety of income-producing plans during retirement," he stated.
The Bottom Line
A primary concern for numerous retirees is attaining financial security while enjoying a pleasant way of life. Safeguarding your buying ability by employing effective tax methods, income management, and financial adaptability is crucial to realizing this goal.
This article is part of Healthy Survival'Top 100 Money Expertsseries, where we highlight insights from professionals to the most significant financial questions Americans are posing. Do you have a question of your own?Post it on our platform— and you will be eligible to win $500.
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This piece first was published onHealthy urvival: 5 Strategies to Maintain Your Buying Ability in Retirement