6 Tips to Ensure That Inflation Doesn’t Impact Your Retirement Plans

6 Tips to Ensure That Inflation Doesn’t Impact Your Retirement Plans

It’s 2022, and inflation is here to stay. That’s why you need inflation-informed investment management to help you navigate the price increases and volatile market. Lucky for you, affordable financial planning in the Bay Area is readily available to tackle financial stress.

Despite its repeated use of the term ‘transitory,’ the Federal Reserve has recently shifted its verbiage to reflect that we will be experiencing a long period of higher inflation than it originally forecasted. 

The S&P 500 has dropped nearly 10% in January, with inflation likely being the primary catalyst for the pullback. Even with the interest rate hikes on the horizon, bond yields are still meager.

Inflation (though psychologically painful) does not necessarily have a significantly negative material impact for those still working. Rising costs may be met by increasing incomes, keeping purchasing power relatively unchanged. If aggregate prices rise 5%, most workers may enjoy around a 5% raise, meaning the number of goods and services they’re able to buy stays about the same.

But what about those who are no longer working? 

What do retirees do in periods of high inflation? 

What can you do to protect your purchasing power?


Don’t let inflation rule your financial future. Follow your BIG financial ambitions by working with a registered investment advisor in Newark!


As a financial advisor in Newark, California, my thoughts are on the impact of inflation on retirement savings and what you can do to help reduce its corroding effects.


What is Inflation (and where did it come from)?

Inflation measures the rate of increase in prices in an economy. When we say that inflation is at a 2% annual rate, we mean the aggregate cost of goods or services has increased by 2%.

Over time, inflation occurs when the money supply grows at a rate faster than total production. If there is a 10% increase in the amount of money and a 2% increase in the number of goods or services, the aggregate cost of all goods and services will rise (assuming demand stays constant) – it has to.

To keep the economy burning, the government decided to rapidly increase the supply of money and place the stimulus mainly in the hands of American consumers. This expanded money supply, coupled with extraordinarily high demand, has far outpaced the growth in economic output. Thus, aggregate prices rose and continue to rise.


Inflation and Retirees

Nobody wants to run out of money in retirement. Unfortunately, the Federal government’s monetary policy – which targets inflation, albeit at a slower pace than we’re currently facing – means time is not on your side. Every year, each dollar you have saved will buy you less than it did the year prior. 

Unlike those still working, you do not have wages which may also increase at a proportional rate.

You must factor inflation into your retirement plan. Failing to do so will result in a plan that fails. Let’s look at a few common strategies you can use to lessen the effects of inflation.


5 Tips for Tackling Inflation in Retirement

1. Be prepared

This one is simple: Expect inflation and make an effort to plan accordingly. 

2. Delay Social Security benefits

Social Security continues to lose purchasing power. The annual cost-of-living adjustments (COLAs) are simply not keeping up with inflation.

If you can afford to, there are several (nuanced) reasons why delaying taking benefits until age 70 is something to be seriously considered.

3. Reconsider your investment strategy 

Historically, bonds have provided steady income with relatively low volatility. Since 2009, the Federal Reserve has for the most part held interest rates extremely low to spur the economy. This has forced retirees into riskier assets to grow their portfolios in retirement. 

But, just because you have to invest more into equities doesn’t mean your portfolio needs to take on proportionately greater risk. Proper asset allocation can improve your portfolio’s returns without a corresponding uptick in volatility.

Asset allocation does not ensure a profit or protect against a loss.

4. Decrease expenses 

One way to maintain your purchasing power is to require less money to fund your lifestyle. Can you downsize or move out of the city? Do you need to keep paying for that storage locker full of junk?

(Maybe consider a golf lesson or two – all of those Pro Vs. you keep losing are starting to add up.)

5. Consult with a professional 

I’m not going to lie to you; retirees currently face an incredibly harsh environment: High inflation, artificially and persistently low-interest rates, and an unpredictable (to stay the least) stock market. It’s hard to know where to turn – nothing seems safe. Plus, you can’t afford to be wrong.

Fortunately, you don’t have to go at it alone. Hiring a financial planner may be one of the best investments you can make, financially and emotionally. The ability of a good retirement plan, customized for your unique situation by an advisor you know, may help to reduce your financial anxiety.


Schedule a meeting with our comprehensive financial planning team in Newark, CA. Allow us to demonstrate the value we can provide for your retirement.

In Conclusion

There’s no way around it: You need a holistic retirement plan with an investment strategy that will strive to meet your goals, provide sufficient income, mitigate inflation risk, and – most importantly – give you the confidence today of an independent tomorrow.

If you’re overwhelmed by the prospect of creating this type of plan for yourself, you’re not alone. But, it’s a plan you need, and one you have to get right to help mitigate the risks of inflation and keep up with rising costs throughout your retirement.

The rest of your financial life begins with today’s financial advice. Chat with Humanity Wealth Advisors to learn more about inflation resilient wealth management.


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Investing involves risk, including possible loss of principal.
Humanity Wealth Advisors and LPL Financial do not provide legal advice or tax services.  Please consult your legal advisor or tax advisor regarding your specific situation.

More about the author: Harry Sherdil

As a fiduciary financial advisor at an independent firm, Harry strives to offer the same resources, tools, and research as bigger firms while serving new and existing clients' best interests.