Inflation Is Ruining Your Retirement in 4 Ways — Here’s How To Course Correct

Cropped shot of a happy senior woman sitting alone in her living room and going through paperwork.
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As inflation creeps ever higher, Americans are watching their buying power dissipate. And with it, the value of their retirement savings. There are several ways inflation is ruining your retirement, from preventing you to save as much as you’d like, to tanking your 401(k) investments and stock market returns.

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Learn: What Happens When Inflation Surpasses Your Budget?

But don’t despair. If you’ve got some time until retirement, there’s plenty of chances for inflation to slow and the bear market to even out. Most bear markets, based on research, last less than a year. But if you’ve never been through these economic conditions before — or are a current retiree — you’re undoubtedly stressing as your investment portfolio plummets.

These are four ways inflation is ruining your retirement — and some tips to mitigate the damage.

1. Less Buying Power

Inflation is similar to taking a pay cut — your money doesn’t go as far at the gas pump, grocery store or even restaurants. If you haven’t gotten a raise in this tight labor market, it may be time to ask for one.

If you’re a retiree on a fixed income, you’ll want to look at ways you can reduce your cost of living. Alternatively, you can consider a side gig to earn some extra cash. Plus, staying active in retirement has physical and cognitive benefits that can help you feel younger.

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2. Less Income from Savings

Traditional retirement accounts, CDs, bonds and short-term savings accounts haven’t yet experienced the boost from the Fed’s recent interest rate hikes. “We know banks, brokerage firms and financial institutions are quick to raise rates on loans and mortgages,” Pam Krueger, founder of Wealthramp, told AARP. “They tend to react slowly to raising savings rates. If your cash is earning 2% and inflation is running at 4% or above over the next 10 years, that has a damaging effect on purchasing power in the future.”

However, it is a great time to invest in U.S. savings bonds since yields are up and prices are down.

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3. Investments Plummeting

If you are looking at holding your stocks and other investments until the bear market turns, you may have nothing to fear. Avoid looking at your portfolio, but stay the course when it comes to investing. Dollar cost averaging can mitigate risk and eliminate your need to time the market to find the bottom on your favorite stocks.

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However, if you’re already retired and living, in part, off investment income, it could be time to rebalance your portfolio. Make sure you are investing based on your risk tolerance, and you’re not losing a fortune in fees. A solid portfolio will have a mix of stocks, bonds, cash and commodities to hedge against risks that specific sectors may experience, according to AARP. The organization offers an “Ace Your Retirement” tool to help you plan for retirement.

Social Security Reform: Inflation Protection High on Voters Priorities List — What It Means for COLAs
Conversely: 5 Ways Inflation is Cooling Ahead of Consumer Price Index Report

4. Delayed Retirement

If you are nearing the end of your working years, you may find inflation has caused you to delay your retirement plans. If that’s the case, you may consider if moving to an area with a lower cost of living could help you retire as you hoped. You can also use AARP’s Retirement Calculator to see how much you’ll really need to retire comfortably.

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About the Author

Dawn Allcot is a full-time freelance writer and content marketing specialist who geeks out about finance, e-commerce, technology, and real estate. Her lengthy list of publishing credits include Bankrate, Lending Tree, and Chase Bank. She is the founder and owner of, a travel, technology, and entertainment website. She lives on Long Island, New York, with a veritable menagerie that includes 2 cats, a rambunctious kitten, and three lizards of varying sizes and personalities – plus her two kids and husband. Find her on Twitter, @DawnAllcot.
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