Rising costs are affecting all of us, but there are strategies you can employ to take back some control
By Olev Edur
It’s perhaps easy to forget, having lived with minimal inflation for most of the past four decades, just how destructive soaring prices can be. But by mid-2022, inflation was at its highest point in 40 years, led by gasoline, the price of which went up as much as 60 per cent year-over-year; this in turn affected practically everything else because all physical goods have to be delivered and that requires gasoline. The result has been a degree of financial dislocation for everyone—particularly retirees and others who must live on a low or fixed income.
Thankfully, the abnormal price growth has been slowing lately—gas prices have actually fallen in recent months—but it’s unlikely that most prices will ever subside to pre-pandemic levels. So how do you compensate and ensure that this higher price paradigm doesn’t guide your retirement planning off the rails?
There are in fact many ways to fight inflation’s impact on your finances, and thanks to the Internet, these solutions are easier to access than ever before. “There is so much help online now, and so much information,” says Susan Eisner, CEO of SolveYourDebts.com, a not-for-profit online credit-counselling firm serving the Atlantic provinces and Quebec. “But you need to know where to look and who you’re dealing with.”
In particular, you need to avoid all those cut-rate deals and empty promises that are rife on the Internet and can seem so attractive when you’re desperate for a solution; many are aimed specifically at retirees and inevitably too good to be true. Deal only with names you know and trust, and if you ever do need help, you can always get a free consultation at a not-for-profit credit-counselling firm. (see below: Reaching Out for Help)
You may not even need to leave home. “It doesn’t matter where you are,” Eisner says. “We can do a 1½-hour session online and make some recommendations based on that.”
First, a Budget
The first step in the consultation process is making a budget—that’s the only way you can truly get a handle on your finances, pinpointing where savings could be had and how. “I can’t stress any harder the need for a budget and the need to review it regularly,” Eisner says. “If you don’t have a budget, then you should develop one. If you have a budget, get it out and review it.”
She acknowledges that most seniors, especially those on low or fixed incomes, have already faced the need for a budget, but she repeats that if they have created one, they should be reviewing it routinely.
Gursharon Singh, client experience manager with Credit Canada Debt Solutions in Toronto (also a not-for-profit), agrees: “Budgets don’t seem to be as much of an issue with seniors, because they’ve been through enough ups and downs already,” she says. “But budgets are just one of the first steps [in tackling inflation-related problems]. There are other methods of attack.”
For example, most seniors recognize the importance of minimizing personal debt. While business or investment-related loans are tax-deductible, personal credit must be paid with after-tax dollars, compounding the real cost. Nevertheless, some fixed-income retirees may believe they have no other choice.
“Debt is a case of overextending one’s budget, and there are other options,” Singh says. “We always suggest that you learn to live within your means without resorting to credit. Canadians in general are overleveraged—the average debt per person now is $1.86 for every dollar of income they receive, and that’s very high.”
Shopping for Savings
If you have made or reviewed your budget, made as many cuts to your spending as you think possible, and locked away the credit cards yet still find yourself falling behind on your bills, what next?
“Sometimes with seniors, it’s not a case of what they should do—we often stress what they should not do,” Eisner says. “That includes things like cutting back on medications or going without other essentials because they’re a proud demographic and don’t like to reach out for help.”
Online suggestions and tips for saving money abound; some you may have already tried—cutting back on frills, discontinuing unused services or subscriptions, dining out less often, maybe even foregoing that annual vacation down south in favour of sticking closer to home. (Canada has lots to offer, particularly if you can learn to enjoy our winters.) But there may be many further options, depending on your creativity and willingness to adapt.
“Maybe you could change your cable service to a streaming one,” Eisner suggests. “Make shopping trips less often to save on gas or use stores that are closer to home. Switch to generic brands. Plan your meals to minimize waste.” Keep in mind, too, that a lot of seniors discounts now start at age 55. “Don’t be too proud to ask,” she adds, citing the case of a friend who was offended when asked by a cashier if he wanted the seniors discount.
Eisner also advises joining points programs and/or using coupons—they’re available from most large vendors and appear in numerous listings websites. Similarly, all the major grocery chains produce weekly flyers that are now available online, with discounts on different products every week. If you can adjust your shopping patterns to take advantage of these offers, the savings can be substantial. “A lot of people still don’t bargain shop,” Eisner says. “There are lots of deals available, but you have to know where to look.”
Harnessing Group Discounts
“Pooling expenses is a practice that is often overlooked,” Singh says. “Tap into your community; it could be your family members or people in your neighbourhood. Look at what group discounts are available, and see who’s around to help.” Eisner agrees: “You should try to share the load wherever possible.”
Eric Long, a Toronto-area widower, has long been using a combination of these strategies to achieve sometimes huge savings. “I started collecting points and flyer-shopping when my wife and I first bought our house and money was tight,” he explains. “It’s become a habit now. I pay a bit more now for some things, but because of the sales, other things still cost about the same as before the pandemic.”
Long adds: “Sometimes there are two-for-one sales or multiple points offers if you spend a certain amount, perhaps $50 or $60. For these, I may call a few friends who are usually willing to chip in. Sometimes we wind up getting stuff for less than half the normal price.”
Having a decent freezer and lots of cupboard space is also helpful, he notes. “If I find something on deep discount and it can be stored, I might buy a bunch myself. I’ve got over a year’s worth of toilet paper in the closet because sometimes it goes on sale in bundles equal to 100 rolls for $18; Loblaws recently offered them for $12 to President’s Choice members—that’s 12 cents a roll.”
Since almost all the weekly supermarket sales in his area run from Thursday to Wednesday, Long says he makes a list of things to buy at three or four stores and then does a single shopping run to them all, usually on Friday mornings. “Thursdays can be crowded because everyone wants to be first. Fridays are less so, but there’s still lots of product—enough to supposedly last the weekend.”
When you’re planning your shopping, always be on the lookout for new opportunities to save. Go online and Google “shopping deals, sales, bargains” in your city or town. But guard your personal information, and, above all, don’t send money for products or services unless you know the vendors or have checked them out thoroughly.
Finally, if things seem insurmountable, get some help. (see below: Reaching Out for Help) “Don’t be too proud to reach out,” Eisner says. “That’s why we’re here.”
And a positive note for some retirees: as central banks raise interest rates in order to dampen the consumer demand that causes prices to rise, the returns from fixed-income investments rise, too. You may want to double-check your savings portfolio to see if some reallocations might be in order as rates climb further.
Reaching Out for Help
If you are going without essentials such as medications or proper meals, plundering your savings, or sliding inexorably deeper into debt because of inflation, you need financial help. If you don’t have or know of a trustworthy advisor and need financial help, there are all sorts of listings and ads online, but be wary and selective. Always look for accreditations, and double-check reputations. If money is short, free help is available from an accredited financial counsellor.
“Seniors are at risk for predatory practices when it comes to money, so you should always make sure to deal with an accredited financial counsellor,” says Gursharon Singh, client experience manager with Credit Canada Debt Solutions in Toronto.
“Accredited counsellors receive specialized training, must abide by a code of ethics, and have many requirements to uphold. They provide only regulated solutions, so you’re not likely to fall prey to overpromises.” (To become an accredited financial counsellor in Canada, a person must complete the Accredited Financial Counsellor Canada program offered by the Association of Financial Counselling and Planning Educational Institute.)
“There is no charge for consulting an accredited counsellor at a not-for-profit agency and no obligation to sign on to anything,” Singh adds. “You should get a qualified third party to look at your situation, to provide a second pair of eyes. A different set of eyes can always provide added insight and come up with the best solutions to problems, and a professional can let you know what all your options are.”
Of course, you also may be able to get a free initial consultation from an accredited advisor at a for-profit credit-counselling firm, but as both Eisner and Singh point out, a not-for-profit is motivated to find the best solution for the client, while a for-profit may be motivated to find the best profit. There may be fees later in either case (assuming further consultations), but those of non-profits tend to be modest. As always, shop around and compare prices, and do the background checks.