For senior homeowners on a fixed income, 2023 has been a particularly tough year, as many used credit cards to pay for increased day-to-day living expenses. With rapid inflation and higher costs for products and services, seniors had to take on more debt just to live. To make matters worse, Social Security income has not kept up with the increased cost of living.
Why Depending on Social Security Isn’t Always Enough
Social Security was created to help provide economic security for the elderly by creating a work-related, contributory system in which workers would provide for their own future economic security through taxes paid while employed. (1)
However, the way benefits are calculated generally consider this demographic as a whole—not on a one-to-one basis. Social Security benefits in the United States are typically adjusted annually based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This index reflects changes in the cost of living, including expenses such as housing, food, transportation, and medical care. If the cost of living increases, Social Security benefits may also be adjusted to help beneficiaries maintain their purchasing power.
If there was a significant increase in the cost of living the prior year, this increase could lead to a subsequent adjustment in Social Security benefits to help seniors cope with the rising expenses.
Again, it’s essential to note that Social Security adjustments are based on a formula and are not always a one-to-one reflection of the actual increase in living costs.
All of which leads us to the problematic situation that many seniors are facing today—relying on credit cards to cover living expenses.
Seniors Have A Range of Financial Options
Depending on individual circumstances, it may be advisable for seniors facing financial challenges to explore additional loan options, budgeting strategies, or use the increased equity in their home to pay off debts with no additional monthly payments.
For example, seniors may be able to take advantage of their increased equity through reverse mortgage solutions.
At Reverse Mortgage Ready, we welcome your questions. Our professional team of mortgage experts can also help determine if a Reverse Mortgage is the right solution for your financial needs.
Whether it is a new first mortgage, or a Reverse Mortgage Home Equity Line of Credit (HELOC) behind your existing fixed-rate first mortgage, we offer a free, no-obligation consultation to evaluate the best options for you.
Sources:
(1) https://www.ssa.gov/history/briefhistory3.html#:~:text=Social%20insurance%2C%20as%20conceived%20by,through%20taxes%20paid%20while%20employed.
