How to Keep Up with Inflation during Retirement

Hi. I’m Connie. As a serial “Grandmapreneur®”, I speak to retirees or soon-to-be retirees on the benefits of pursuing entrepreneurship in retirement. This blog post will help entrepreneurs understand how to keep up with inflation during retirement, which you will need as you consider starting a business.

Inflation during retirement often comes with scary stories. Think about this: a person with $1 million saved for retirement expects to spend $50,000 annually.

Assuming 3% annual inflation and a 3% return rate, $1 million would last for 20 years. But if inflation rose to 12% a year, $1 million would run out in 11 years and nine months. That reason’s alarming enough.

Even for those with the best plans, inflation is an uncontrollable factor that messes with retirement. The potential for rising prices only adds to this concern.

So how do you keep up with it? This post looks closely at how you can keep up with inflation during retirement.

How to Keep Up With Inflation during Retirement: Top 5 Ways

Here’s how you can combat inflation during retirement:

1. Delaying Social Security Collection

You’re eligible to receive retirement benefits at 62. You can hold off if you have enough spare cash to last until you reach your full retirement age.

The longer you can afford to wait, the larger your monthly benefit will be. Wise social security management helps you fight inflation during retirement.

2. Reviewing Expenses

You may sense the increase in prices, but you may not be able to pinpoint where it’s hurting you.

Reduce certain costs while adjusting budget lines. You can do this by making a list of your needs and shopping in bulk to reduce your grocery bills. Plus, avoid making needless trips and group errands to save on gas and transportation.

Downsizing might be a great option if you want to cut back on your expenses.

3. Paying Off Debts

The demand for borrowing rises with increasing inflationary costs. It favors lenders and drives them to raise interest rates.

On top of these, variable-rate credit products like credit cards may enable lenders to make more money. So, pay off your debts as soon as possible to prevent paying excessive interest rates.

4. Maintaining A Balanced Financial Portfolio

Investing sensibly and diversifying your portfolio are viable solutions to combating inflation during retirement.

A portfolio is a group of financial investments such as commodities, bonds, and cash equivalents (including closed-end and exchange-traded funds).

Investing in balanced advantage funds is a perfect approach to mitigate the effects of inflation and the resulting volatility.

5. Having Accessible Cash

You need cash for both short-term objectives and crises. Cash mainly acts as your emergency fund for unforeseen expenses and job loss. You also need it for your daily living costs.

Additionally, it’s better to have constant access to cash on top of an emergency reserve. To avoid withdrawing your stock investments when markets go down, you must have an accessible cash reserve.

Conclusion 

You should take inflation into account while planning for retirement.

Consider the difference between prices now and in the future. Small price increases accumulate over time, and it’s challenging to anticipate inflation based on different factors.

To reduce risk, you must diversify your retirement fund and manage your cash well to keep up with inflation.

Do you want to keep up with inflation by becoming a second-act entrepreneur? My book might just be the answer. It’ll show you that it’s never too late to start your dream business. Check it out now!