Inflation and Your Retirement: Are You Prepared for Rising Costs?

Do you know what we often say the greatest tax on the American people is?


It has the power to do everything from increase the cost of groceries, limit how far each dollar we earn stretches, and impact our investments for retirement. But how can we take steps for the rising costs in our retirement plan?

What is inflation and how does it impact retirement?

A simple definition of inflation is when prices increase in an economy over time. In other words, the cost to live gets higher. Inflation is often responsible for the increased costs of things we buy, which isn’t an issue when our wages also increase at the same pace, but generally speaking the inflation of costs of goods can outpace our increase in income. As a result, our dollars don’t stretch as far as they once did.

Now, consider what happens once you retire. Your income will no longer fluctuate to meet inflation because you aren’t getting pay raises from a job and likely have a fixed income source. If inflation continues to grow at 2% per year, by the time you have been retired for 10 years the cost of groceries could be 20% more than when you first retired. If you haven’t planned for the rising costs due to inflation, you could have a shortfall as your expenses outpace your income in retirement.

How can you prepare for inflation in your retirement plan?

We cover this in more depth in our free guide: “Inflation and Your Retirement.” While inflation will fluctuate over time and no one predict with 100% certainty what the economy will do, there are a few things you can do to help protect your retirement against high inflation rates:

  1. Avoid  long-term, fixed income investments. Fixed-income investments are things like corporate bonds, money markets, and Treasury bills. If you own these investments for more than 15 years, inflation may eventually outpace the return and negatively impact your retirement income.

  3. Look for equity stocks that can pass through increased earnings. During times of high demand, companies can increase prices and positively impact earnings. They may pass these earnings on to investors.

  5. Look for strategies to provide guaranteed income. Some products with guaranteed payouts, like fixed index annuities (FIAs), are insurance products that may be able to help your savings outpace inflation. With some annuities, you can pay for an optional rider, which helps your payouts keep up with inflation.

  7. Spend wisely. Look at any potential big purchases coming up. As inflation continues to rise, it will likely be more expensive to purchase later. These would be expenses like a new car, purchasing a home, or remodeling your bathroom. If there are any of those purchases you can make earlier, you may actually spend less due to inflation.

  9. Meet with your financial professional. There is no better time than right now to take action and protect yourself against rising inflation. One of the best ways you can do that is to meet with a financial advisor to review your current savings and investments to see how they will stand up to inflation.


Inflation is a part of our economy. It controls the costs of goods we purchase and the cost of living. You can find more information on how inflation could impact your retirement by downloading our free guide: Inflation and Your Retirement: Are You Prepared for Rising Costs?

If you don’t have a financial advisor or would like a second opinion, our team here at 210 Financial would be honored to discuss strategies to help protect your savings against inflation.

Fixed index annuities are designed to meet long-term needs for retirement income. They provide guarantees of principal and credited interest, and a death benefit for beneficiaries. The interest credited on your contract may be affected by the performance of an external index. However, your contract does not directly participate in the index or any equity or fixed interest investments. You are not buying shares in an index. They are subject to surrender charges and may have applicable fees. Guarantees are backed by the financial strength of the issuing company. Annuities are not bank or FDIC insured.

All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

This content is provided for informational purposes only. 210 Financial is an independent financial services firm that utilizes a variety of investment and insurance products. Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and 210 Financial are not affiliated companies. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by 210 Financial. 1234227 -2/22

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