How can I minimize the impact of inflation on my retirement savings?

1 min readLast updated November 10, 2023by Rachel Carey

Unfortunately, we can’t predict the future. No crystal ball can tell us what the economy will look like when we retire. Will we enjoy another boom, or will Wall Street be crashing around us?

Inflation poses a huge risk to your retirement savings. In fact, the Unbiased 2023 Retirement Confidence Survey revealed inflation and its related risks were the biggest retirement concerns among Americans. 

So, how do you prepare for inflation and ensure your retirement savings will survive? Without that crystal ball, it’s wise for all upcoming retirees, whether you’re in your 30s or 50s, to plan for every eventuality.  

1. Develop a solid financial plan 

Financial planning provides some desperately needed reassurance. A financial plan takes stock of your incomings and outgoings and helps you to define your goals and determine the steps for achieving them.  

A solid financial plan helps make big financial decisions a little less daunting and can get you through life events you may not see coming, as well as alleviate concerns you might have about the future.  

While it’s best to start planning as early as possible, anyone can create a financial plan regardless of where they are on their financial journey. This includes those looking to retire in the near future, those who are a few decades away, and those who are already enjoying their new chapter.  

2. Consider downsizing or even relocating 

Moving to a smaller home or relocating to another state or country is extremely common in retirement.  

Whether being closer to family or wanting to enjoy a warmer climate are factors in this decision to move, personal finance also plays a big part. According to Vanguard, 60 percent of retirees who move end up selling their home in a high-priced market and move to a cheaper locale, extracting about $100,000 of home equity.  

Different states also offer cost savings as the cost of living varies greatly. 

States such as Florida and Texas have no state income tax. This means you won’t have to pay as much tax on your retirement income. For those looking to hang onto as much of their retirement funds for as long as possible, heading to a state with a lower cost of living ahead of retirement could be beneficial.    

3. Keep saving 

Yes, this may be obvious, but during times of inflation, people often redirect their money away from savings accounts – such as your 401(k) or IRA. While this may seem like the only viable option in the moment, it can have huge repercussions down the line.  

One way to avoid falling into this bad habit is to pause any big purchases. Consider putting holidays and luxury items on the back foot until you feel more comfortable with your finances to justify such a spend.  

Also, as you get closer to retirement, you may end up paying off some longstanding loans – such as your mortgage or car payments. Instead of adding it back into your day-to-day spending pot, redirect this income to your retirement accounts. Yes, it might be the boring option, but your retirement will thank you.    

4. Add some inflation-savvy investments to your portfolio  

During times of high inflation, savvy investors move some of their money to assets that benefit from inflation or at least keep up with it. 

Treasury Inflation-Protected Securities (TIPS) are government bonds that mirror the rise and fall of inflation. Based on the U.S. federal government, they are one of the safest investments you can make.  

Real estate is also another popular option, as property value tends to increase during periods of high inflation. Real Estate Investment Trusts (REITs) are another way of investing in real estate without buying or owning a property. REITs typically outperform the rate of inflation, offering investees a strong and stable option.  

Short-term bonds, stocks, and investing in gold and other commodities such as oil and metals can also offer some relief from the downturns associated with inflation.  

5. Speak to an expert 

With rising costs making life more difficult for many, seeking expert help to make your biggest financial decisions has never been more important. It’s during these tough times that financial advice often proves most valuable.  

A financial advisor will work with you to understand your current financial situation and what you want your retirement to look like. From here, they will develop a plan to help you meet your goals and feel confident about your financial future.  

In fact, according to the Unbiased Financial Confidence Survey, 41% of those surveyed said getting advice from a financial advisor would give them the most reassurance when making a financial decision. 

For most of us, the holy grail is financial peace of mind, the confidence that whatever happens down the line, our future will be cared for. And that’s exactly what good financial advice can provide.  

At Unbiased, we empower you to make confident financial choices, tell us what you need, and we’ll connect you to trusted, tailored, and timely advice. Answer a few questions, and our dynamic search feature will pair you with your perfect financial professional. Find your perfect financial advisor today 

Senior Content Writer

Rachel Carey

Rachel is a Senior Content Writer at Unbiased. She has nearly a decade of experience writing and producing content across a range of different sectors.