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How to Beat Inflation in Retirement Planning

We’ve all heard the phrase that two things in life are certain: death and taxes. There is a third one to add to that: inflation.

Have you ever found yourself saying things like, “Wow, eating out has gotten so expensive?” or, “Back in the day, going to the movies was so much cheaper!” When you think about it, has the price of anything gone down and stayed there?

Inflation is the increase in the price of everyday items. Things like gas, groceries, and common necessities are all affected by price increases. Housing and transportation are also hit. How does inflation affect retirement planning?

Inflation is the increase in the price of everyday items. Things like gas, groceries, and common necessities are all affected by price increases. Housing and transportation are also hit.

How does inflation affect retirement planning? We look at some ways it can impact retirement, plus we put together a game plan to beat it.

Inflation and Retirement Planning

Planning for retirement is a smart thing to do. When you have a strategy and stick to it, you will find that you have more choices when you hit your 60s, 70s, and 80s. One of the things to take into consideration in your retirement planning is the inevitable rise in inflation.

We’ve discussed inflation before. It affects the cost of living and can eat away at carefully laid plans. Some common effects of inflation include the following:

Diminishes purchasing power: The money you have will buy fewer goods and services than before. Because of inflation, the price of goods and services increases, and what you get for your money decreases. For example, think about the cost of gas. You budget $55 to fill up at the pump every week, but that figure now creeps up to $65. Inflation has caused you to pay more for the same amount of gas, meaning your dollar doesn’t go as far as it once did.

Raises interest rates: Borrowing money becomes more expensive. As a result, the monthly payment on boats, cars, homes, and other financed items is increased. People tend to cut back on general spending when interest rates move upward, and they also delay the purchase of bigger-priced items like automobiles and houses.

Increases volatility in the economy: With the rise in interest rates, decrease in consumer spending, and rise in inflation, the economy and stock market can become volatile and unpredictable.

Beating Inflation in Retirement Planning

Now, let’s talk about some solutions and a game plan. The amount of money that you think you need for retirement, especially if you want to maintain your current lifestyle, is probably more than you think. So, careful planning and strategizing are important in order to beat the effects of inflation.

What are some ideas that you can implement starting today?

Invest in things that will go up in value: This seems like a no-brainer, but think about what people purchase that never goes up in value. Things like cars, computers, furniture, jewelry, phones, sports equipment, timeshares, and wedding dresses can cost hundreds or thousands of dollars but rarely, if ever, appreciate in value. These things are expenses, not investments. Some things that will increase in value over time include bonds, real estate, and stocks. It’s important to invest in the things that appreciate, not depreciate, in value.

Diversify and reallocate your portfolio: Don’t put all your eggs in one basket. While certain stocks may be hot right now, they might not be 10 years from now. With a balanced portfolio, if one asset takes a hit, there is another one that can balance out that downturn with a rise in value. Working with a financial planner can help ensure that you have the best mix of investments and assets for the best returns.

Decrease your expenses: While it’s easier said than done, cutting back on expenses can benefit you regardless of what season of life you are currently in. Drastic and draconian measures aren’t always the best idea, but revisiting your list of expenses is often eye-opening. Do you really need a subscription to every video streaming service, or is one enough? Would you be willing to decrease your once-a-week dinner at a restaurant to every other week? Take a hard look at non-essential expenses and trim back where it makes sense.

Save more: Again, this is easier said than done. However, there are many tools that you can put in place to help you achieve this goal without too much fuss. First, take a look at your 401(k) employer match. If you aren’t taking advantage of this, you want to get on it right away. This is free money that will help you save more and do it pain-free. There are also automated savings plans, bond strategies, and cash-back rewards cards that can help you to earn and save money.

Consider a side hustle: Keep generating income, even if it’s part-time. By continuing to earn money, you protect yourself from a market downturn or loss of income due to unexpected circumstances. Extra cash is always helpful so think about ways you can use your current skills to teach others or provide a service. A side gig can be done online or in person, depending on your time, ability, and inclination.


Inflation impacts us all. But while you are planning for retirement, you will want to take inflation into account. Oftentimes, retirees are on a fixed income so when prices rise at a faster rate than their income, it can be troublesome.

Being aware of how inflation can affect your retirement plans is important so you can take the necessary steps to keep ahead of it. With a good game plan for investing in things that appreciate in value, diversifying your portfolio, decreasing expenses, increasing savings, and continuing to earn extra money, you will be ready to enjoy your retirement years.


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