14 Practical Steps You Can Take Now To Prepare For Inflation In Retirement

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Inflation has been a concern for many in recent months, especially those in or approaching retirement. The rising costs of gas, food and other necessities mean people are spending more on daily life, and retirees may worry that they don’t have enough saved to keep up.

But retirees and soon-to-be retirees don’t necessarily have to keep working to offset inflation. Looking closely at your investment portfolio and developing a solid financial strategy can be the key to finding more money to cover inflation costs during your golden years. Below, 14 Forbes Finance Council members share actionable advice for those in or near retirement who want to shore up their finances in the face of ongoing inflation.

1. Review Your Portfolio With Your Financial Advisor

When was the last time you did a full review of your assets with your financial advisor? If you are nearing retirement, you should be adjusting your investment portfolio accordingly. Many people have a more aggressive growth strategy early in their lives that must be shifted to a more stable, slower growth strategy as they get closer to retirement. A few simple adjustments may be all that’s needed. – Joseph Orseno, Tiltify

2. Diversify With Investments That Aren’t Subject To Interest Rate

The old phrase “cash is king” has not held true over the last year and a half. The purchasing power of cash has actually decreased by more than 8%. However, the stock market has been rocky, and fixed income has been negative as well. Make sure you have some investments that aren’t subject to interest rate changes or market risk. – Luke McCarty, McPherson Financial Group


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3. Rebalance Your Portfolio

Retirees who are nervous about inflation and, in particular, about their investment yields shrinking relative to their living expenses, will want to rebalance their portfolios away from assets such as long-term bonds and growth stocks to assets such as shorter-term bonds and value stocks. Treasury inflation-protected securities, or TIPS; real estate-backed investments; and commodities also tend to do well in inflationary environments. – Sean Frank, Cloud Equity Group

4. Pursue Alternative Assets

Diversifying into alternative assets such as real estate is a great way to benefit from inflation. Multifamily properties that lock in long-term, low-interest rates benefit from rising rents with locked debt payments. These assets are typically able to pay monthly distributions on invested capital and offer long-term appreciation. – Randal McLeaird, Ridgeline Investment Group

5. Liquidate Assets To Increase Cash Holdings

Look at your assets and investments. Move your investments to safer areas in the market and limit your risk exposure. Then, look at areas of your portfolio you can liquidate to increase your cash holdings if that is the plan—for example, your home. You can liquidate and move to a cheaper area with a lower cost of living and possibly no sales or income tax, depending on the state. Be frugal, and look for deals! – Thomas Johnson, Southport Marketing, Inc

6. Consider Delaying Retirement

Delayed retirement credits can be a lifesaver. By claiming retirement benefits after the full retirement age, your benefits will grow and your overall lifetime payouts will increase. This is a great financial incentive for those who may opt to continue working past the full retirement age. The Social Security Benefits website has a calculator to help users determine their delayed retirement credit. – Lilit Davtyan, Phonexa Holdings, LLC

7. Add Dividend-Paying Stocks To Your Portfolio

Make sure your portfolio contains a healthy dose (more than 70%) of well-managed, dividend-paying stocks. Over the long sweep of history, the rising dividends and capital values of the world’s greatest companies have delivered nominal returns of 10% versus 3% inflation. That real return of 7% will help offset reasonable retirement withdrawals of 5% annually while still building a legacy for your heirs. – Erik Christman, Oxford Financial Partners

8. Stick To Your Financial Plan

The first five years of retirement are the danger zone when people tend to overspend. Inflation is not nearly as big a threat to long-term financial health as is not sticking to a financial plan. Retirement doesn’t mean you throw caution to the wind. Inflation can be controlled with good financial planning and personal spending discipline. Have fun, but stick to the plan. – Todd Sixt, Strait & Sound Wealth Management LLC

9. Look At Alternatives In Your Retirement Portfolio

Retirees, on average, are living longer and putting more pressure on their retirement accounts, especially amid inflation. Fixed income streams will likely not keep up with inflation, so look at alternatives in your retirement portfolio. Consider real estate or keeping some of your savings in the stock market to mitigate the effects of recurring or elongated inflation. – David Kelley, Mailprotector

10. Move Your Portfolio Away From Equities

The typical rule of thumb when approaching retirement is to position portfolios more conservatively. This protects you against a significant correction in equities. It would be best to move the portfolio away from equities and more into either cash or fixed income. It would also be wise to include hard assets such as real estate and gold, as both have historically been good inflation hedges. – Sonya Thadhani Mughal, Bailard, Inc.

11. Prioritize Equity Ownership

Retirement planning requires a long-term view. That being said, the single best asset class to protect you in a market like this one is equity ownership. Aim to have a diversified portfolio that includes bonds such as TIPS while also working to maintain purchasing power by owning equities that are able to continue to consistently increase their revenue despite inflation concerns. – Andrew Glaze, Wealth Stack

12. Work To Out-Earn Inflation

The way to beat inflation is to out-earn it. With investing, a blatant push for higher earnings does correlate with more risk. So instead, I recommend actively earning more income and saving it all to reinvest and doing this until you know, mathematically, that you’re beating inflation. A retiree or pre-retiree who is worried about inflation is likely attempting to retire without having enough invested. – Jerry Fetta, Wealth DynamX

13. Maintain A Complete Household Budget

Too often, we speak with retirees or near-retirees who don’t maintain a complete household budget. This is imperative. Once you’ve established a budget, project out your annual expenses over the next 30 years, using a historical inflation rate of 3.5% per year, compounded. It’s an eye-opening exercise, which highlights the need for both growth and downside risk management. – Ivan Illan, Aligne Wealth Preservation & Insurance Services, LLC

14. Avoid Making Emotional Decisions

Remember that the economy moves in cycles. Concerns such as inflation can cause undue anxiety and fear, which cause us to make irrational, emotional decisions. If you have a good financial plan and a diversified portfolio with assets that can outpace inflation, then stay the course. – DeLynn Zell, Bridgeworth Wealth Management