Wealth management and financial planning; for individuals and businesses.
The Impact of Inflation on Your Retirement Planning

by Meritrust Wealth Advisors

The Real Impact of Inflation on Retirement

As inflation continues to be a hot topic both nationally and globally, many of our clients find their concerns are much more personal. Specifically, the impact inflation has on the value of retirement savings is a significant worry. Over time, inflation can erode your nest egg, pulling you away from your retirement goals rather than closer.


Research by LIMRA in 2016 highlighted a startling fact: a 1% inflation rate over twenty years could reduce your Social Security benefits by $34,406. If inflation rises to 3%, this loss could balloon to over $117,000. Additionally, the Centers for Medicare and Medicaid Services noted a 4.6% increase in healthcare expenditures in 2018, surpassing the average inflation rate of 2.4% for the same period. This means that specific costs, particularly healthcare, can escalate faster than general inflation, further impacting retirement savings. Beyond healthcare, housing, travel, and support for children and grandchildren also play roles in how quickly retirement funds might dwindle.

Strategies to Mitigate Inflation's Effects

Consider Downsizing: 
Moving to a smaller home can significantly reduce expenses related to property taxes, utilities, insurance, and maintenance, even if your mortgage is already paid off.
Diversify Your Investments: 
Incorporating assets into your portfolio that tend to appreciate with inflation, like Real Estate Investment Trusts (REITs) or stocks in the energy sector, can be a smart move. However, it's crucial to note that these investments come with their own sets of risks, such as illiquidity and property devaluations, and might not be suitable for all investors.

Balance with Bonds: 
Complementing your stock investments with bonds can add a more conservative element to your portfolio. It's important to remember that the return and principal value of bonds can fluctuate with market conditions. If not held to maturity, they may be worth more or less than their original cost.



Inflation doesn't have to derail your retirement dreams. With careful planning and strategic adjustments to your financial plan, you can counteract the effects of inflation and secure your desired lifestyle in the golden years. If you're looking for guidance on how to adjust your retirement planning to better withstand inflation, I'm here to help. Let's create a plan that ensures your retirement savings work as hard as you did to earn them.



*The information contained in this material is for general information only and are those of the author, and not a recommendation or solicitation to buy or sell investment products. This material was developed and produced by Levitate which is not affiliated with the named broker-dealer. For a comprehensive review of your personal situation, always consult with a tax or legal advisor.

1 REITs and energy sector stocks are subject to various risks such as illiquidity and property devaluations based on adverse economic and real estate market conditions and may not be suitable for all investors. A prospectus that discloses all risks, fees and expenses may be obtained from your financial professional. Read the prospectus carefully before investing. This is not a solicitation or offering which can only be made in conjunction with a copy of the prospectus. 

2 The return and principal value of bonds fluctuate with changes in market conditions. If bonds are not held to maturity, they may be worth more or less than their origin.
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