The 4 Biggest Threats to Your Retirement (Part 1): Inflation

The 4 Biggest Threats to Your Retirement (Part 1): Inflation

| July 05, 2023

Heading into retirement, people often experience a unique mix of excitement and worry. On one hand, there is a sense of anticipation and relief that comes from the prospect of leaving the daily grind behind, gaining freedom, and embracing a new chapter of life. The thought of having more time for hobbies, travel, and cherished relationships brings joy and eagerness.

However, there is also a nagging worry that accompanies this transition. The uncertainty of the future and the fear of not having enough to sustain your desired lifestyle can cast a shadow over the excitement. In my years of experience helping retirees with these issues, four common concerns include inflation, healthcare costs, taxes, and bear markets. To help lessen any anxiety, and build more confidence in your retirement plan, I’ll be writing a four-part blog series on these topics, with the first focusing on how to handle inflation.

Why Is Inflation a Threat?

We all know that every year things tend to get a little bit more expensive. We see it with the prices of groceries, gas, housing, college costs, and every other good and service we purchase. While it might cause us to roll our eyes, these increases typically don’t cause an ongoing concern. However, in the past year, inflation has been much higher than the historical averages—and has become a major concern for those in or near retirement.

The Consumer Price Index (CPI), which is a common measure of inflation, reached 9.1% in June 2022, the highest it’s been in 41 years. Though it has slowed slightly in recent months (lowering to 4.9% in April), it is significantly higher than the Fed’s target rate of 2% per year.

When the costs of goods rise, retirees will then have to review their budget to see if their income can still afford them the lifestyle they desire. While some pensions and Social Security do have a cost-of-living adjustment, it may not equal the inflation rate you feel on the items you purchase regularly. In addition, in a market correction, you may not feel as comfortable distributing as much from your investments, which makes things even tighter.

What Can You Do to Safeguard Your Savings?

Though inflation has continued to rear its head, thankfully there are steps you can take to minimize the impact.

1.   Reassess Your Budget

Reviewing your budget is a crucial step in responding to inflation. Take the time to analyze your current spending patterns and identify areas where you can make adjustments. Your credit or debit card might even have a tool that categorizes expenses for you, so you can easily delve into areas to cut.

Prioritize the essentials and the things that are most important to you, and cut back on things that don’t add as much value to your life. Additionally, consider negotiating bills, review subscriptions you aren’t using or don’t need, and shop around every time you get quoted for a service.

Lastly, understand the impact that cutting your budget has on your overall financial plan. Do you just need to cut $100 per month? Or would it be more prudent to cut $500? This, of course, is a question that must be answered in the context of how much you’ll receive via Social Security, your pension, your investments, and other income you may have. If you aren’t sure how they all work together, I strongly encourage you to seek out the help of a financial advisor to make sense of all these moving parts.

2.   Supplement Your Income

Another option to consider is supplementing your income. Are there any part-time job opportunities or freelance work that aligns with your skills and interests? You don’t need to go back to the daily grind of 40-hour workweeks. But if you could earn an additional $500 to $1,000 per month while we wait for inflation to cool and your investment portfolio to recover, that could give you the necessary breathing room to get by.  

3.   Make the Most of Your Cash

One small bright side of high inflation is that there are more options to earn a higher rate of interest on your cash savings. While some savings accounts still offer next to no interest, there are other savings accounts that offer high yields on cash. Check your current bank to see what they offer, and then see if other banks offer a more competitive rate.

Other options can include certificates of deposit (CDs) or TIPS (Treasury inflation-protected securities), which are US government-backed bonds periodically adjusted to account for inflation. Regardless of which option you choose, make sure your hard-earned cash is working on your behalf.

4.   Diversify Your Investments

In retirement, you likely have a number of sources of income, with one of the most important being your investment accounts. While it’s impossible to give investment guidance through this blog, it’s always wise to review your holdings and evaluate whether they make the most sense for your situation. Do you only own stocks and bonds? If so, it might be worth looking into real estate, commodities, dividend stocks, or alternative investment strategies that could provide a hedge against inflation.

Do You Have a Plan to Fight Inflation?

While not all of these strategies are necessary for everyone, if you are feeling pinched by high inflation rates, it’s imperative that you review your retirement plan in conjunction with these four strategies.

If you don’t have a retirement plan, or aren’t confident in the plan you have, now is the time to seek out help. I thoroughly enjoy working with people in and near retirement, helping them make smart choices so they can have as much confidence and peace as possible. To get started, you can schedule an introductory meeting by contacting me at (818) 262-3458 or


About Steve

Steve Sansone has over 30 years of experience in the retirement plan industry and is the Managing Director of the Valencia office at SageView Advisory Group, one of the largest Registered Investment Advisor firms specializing in retirement plans. As an Accredited Investment Fiduciary® and Certified Plan Fiduciary Advisor practitioner, Steve works with professional service groups and companies of all sizes seeking to create a world-class retirement plan experience for their plan participants. He serves as an ERISA 3(21) or 3(38) Advisor, bringing independent, conflict-free services to both Plan Sponsor Committees and retirement plan participants. Steve’s expertise in Cash Balance Plans spans nearly 20 years and is one of the few Advisors in the industry that understands both sides of the Cash Balance equation: Actuarial and Investments. He considers his work to be the greatest financial rescue mission of this time, helping people retire on time, sufficiently prepared to write the next best chapter of their life. To learn more about Steve, connect with him on LinkedIn.

SageView Advisory Group, LLC is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where SageView Advisory Group, LLC, and its representatives are properly licensed or exempt from licensure. No advice may be rendered by SageView Advisory Group, LLC unless a client service agreement is in place.