3 Ways to Plan for Inflation in Retirement

Get the Most from your Social Security

Social Security has automatic cost-of-living adjustments built in. It is a unique life-long inflation-adjusted source of income and smart planning can help you get more out of it. Almost one-third of retirees will rely on Social Security to provide 90% of their retirement income. More than half will rely on Social Security for more than 50% of their retirement income.

One of the most important things you can do to protect yourself against rising prices is to make sure you get the most out of your Social Security benefits (for both you and your spouse).

Choose investments that rise with inflation

Some investments and insurance products are more likely to keep pace with inflation than others. The trade-off may be less income now, but more income later. Choices below are categorized into safe, medium, and aggressive levels of risk.

Safe Investments

  • TIPS (Treasury Inflation Protected Securities)
  • Inflation indexed immediate annuities

Medium Risk Investments

  • Inflation Protected Bond Funds
  • Floating Rate Funds

Aggressive Investments

  • Dividend Paying Stock Index Funds
  • Real Estate/Real Estate Funds

What about gold? Despite the common belief that holding gold is a good way to hedge against inflation, in the past gold has been a better crisis hedge than inflation hedge. That means during times of slow steady inflation, gold hasn’t kept up, but it soars during times of crises.

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