When planning for retirement, there’s an overall goal that the plan will withstand the test of time, longevity and all the added variables, like inflation.  

 

Your retirement is being attacked— by inflation! That’s right. Your dreams of sitting on a beach with gray hair, a good book, and a cold beer are under siege by a quiet invisible monster!  It’s time to strategize to protect your later years and conquer inflation once and for all.

 

First thing’s first – it’s important to understand inflation. Before you can defeat your foe, you must understand how they operate. The same is for inflation and you’ll need the upper hand. Inflation isn’t just about increasing prices; it’s about the steady price increase of goods and services, thus decreasing the purchasing power of a dollar. It’s a push and pull ordeal as prices increase, the value goes down and vice versa. 

 

It’s no easy feat to defeat inflation, especially when there are a number of causes, such as: 

  1. Demand-pull theory – This is when the demand for goods and services increases and simultaneously drives prices up to avoid low inventories.
  2. Cost-push – When production costs increase, companies must raise prices to make it profitable. 
  3. Monetary – If there is an oversupply of money, the value of that money goes down, and prices go up.

 

Once you have a good understanding of inflation, devising plans to protect yourself is next. There are ways you can go about this in your day-to-day such as becoming as self-sufficient as possible. 

  • Stock up on products you know you’ll need if you are worried about prices going up. 
  • Invest in energy-efficient home improvement like solar panels, efficient appliances, new windows and the like. 
  • Adapt to the garden-to-table mentality and grow your own food. What a great way to spend all your new free time!
  • Skip the car when you can. Or buy a fuel efficient or electric car. 
  • Buy a bicycle, did you know right now there is a waiting list for electric bikes?

 

The next best shield is your choice of investments. If you choose investments that can out pace or have inflation factors built in, you’ll be better protected. These are some of our top inflation protection plans: 

 

  • Real estate – Your home may be paid off, but buying a rental property could diversify your income sources and help get ahead of (or maybe beat) inflation.
  • Annuities – Some annuities have built in inflation hedges, and can better protect you from market downturns.  
  • Safer market investments, ok.. they may not have a guarantee, but there are portfolios designed to outpace inflation without having to greatly increase your risk.

Inflation isn’t something we hear a lot about regularly unless it rises but we make sure our clients expect it  and plans are prepared for it. It’s important to review your existing retirement plan with your advisor for any weaknesses or inflation exposure that you may have. Schedule a call with a Regent Wealth Management advisor today.