Even in normal market conditions, retirees' number one fear is running out of money. Add high inflation on top of that, and you’re looking at some sleepless nights and understandable anxiety. As advocate advisors, we don’t want you to end up in a tragic retirement situation, so plan and protect your wealth as soon as possible—don’t wait until you reach your golden years.
Inflation complicates retirement, as it’s the natural enemy of a fixed income. As the value of the dollar decreases and your purchasing power dwindles, your life savings can erode quickly. The solution is to plan for the unexpected and apply many techniques to hedge against inflation with certified financial planners in Greenville, SC.
This article will shed some light on a handful of tips for retirees to fight inflation.
How can retirees plan for inflation in their retirement budget?
For people on a fixed income, inflation can impede on your monthly budget. Here are some ways to plan for inflation in your budget:
- Make sure you have an emergency fund setup that can serve as a safety net.
- Monitor projected price increases on necessities such as health care and food.
- Buy less red meat, chicken, and eggs—instead, buy more tuna, veggies, and fruits that are more affordable.
- Cut back on spending where you can.
- Buy necessities, not wants.
- Wait to travel until after gas prices come back down.
- Avoid large purchases if you can.
What are some tips to combat rising prices during retirement?
The ultimate goal of investment advisors in Greenville, SC, is to help you apply the best-laid retirement plans that align with your financial goals. Of course, we know that inflation rises and falls based on national and global economic events, so craft a plan that accounts for all market conditions and life emergencies.
As prices soar, you want to ensure you don’t tap into your retirement savings accounts too soon. There is a tax strategy as to what accounts you tap into first, and this will vary per individual. If you have the option, consider working part-time during inflation, as long as it’s something you enjoy. If you’ve held out on using your social security benefits, maybe now is the time to tap into them.
There’s a strategy for everyone, so ask us your questions to stay afloat and potentially build more wealth.
What kind of investments work best in a high-inflation environment?
Here are some adjustments that can be made to account for inflation:
- To be prepared for inflation and keep up with rising costs, hedge against inflation with diversification.
- Select a combination of growth and income in your portfolio through short-term bonds and stocks.
- Real estate values often increase over time and serve as a good way to keep pace with inflation.
- Social Security payment are adjusted for inflation, but can be offset by rising Medicare premiums.
- Invest in raw material commodities like agricultural products, oil, and metal.
Inflationary periods are a good time to review your overall investment allocation and performance to ensure it aligns with your goals, which could have also changed. Whatever the case, don’t panic in fear and make dramatic changes because of inflation.
Instead, lean on your advocate advisor to steer you in the right direction to retire in the Carolinas and ease your mind during what feels like troubled times.
Are there any other strategies that retirees can use to protect their savings from inflation?
Sudden market drops and economic recessions, and inflation commonly cause panic for retirees and investors. Instead of reacting in fear, make wise moves with a proactive mindset. The key is to create an investment mix based on your risk tolerance, time horizon, and financial situation.
Although you can’t avoid inflation altogether, take the steps to protect your portfolio from it. Working with a financial advisor in Greenville, South Carolina, can be one of your best investments yet.
How do you know if you're on track for a successful retirement when it comes to inflation?
What you don’t want to happen is allow inflation to derail your retirement plan. Per the World Bank database, the U.S. average inflation rate from 1961 to 2020 is 3.3%. If your plan assumes that the rate is less than this, it’s time for an evaluation.
Remember, the 40-year high inflation rate has investors of all ages scrambling to make ends meet, but they are more than likely the ones without a financial plan that is prepped to weather the storm.
Takeaway Tips For Your Retirement Plan During Inflation
- Delay retirement to your full retirement age for Social Security or later
- Reconsider some of your post-retirement goals and their costs
- Reposition your portfolio
- Cut back on big-spending where you can
- Budget and shop with an awareness of higher prices
- Rethink the cost of higher education
- Seek the advice of a qualified financial adviser
How Global View Works Differently
You’ve worked hard to get where you are. An advocate advisor at Global View is here to make sure you don’t give it back. It’s no secret that some financial professionals take advantage of people, especially retirees, so don’t rush the process of hiring the one—you could pay for it in the long run.
Maybe you’re hesitant and don’t know if a financial advisor really can really help. If that’s the case, you don’t have to go all-in from the start. Instead, we will give you an easy way to determine if we’re the right fit.
We are here to help you build a suitable plan, test out different scenarios, and ensure that your plan is updated regularly, given the current market and possible goal changes. Don’t get caught by surprise when upcoming retirement goals fall off track. Instead, look at any assumptions you may have, seek professional guidance, and stay in control of the successful retirement you’ve worked so hard for.
Build lasting wealth with Global View—call us today!