5 Ways To Preserve Your Purchasing Power During Retirement
Written by
Laura Bogart
Edited by
Kristen Mae
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You have a lot of goals for retirement — traveling, starting new hobbies and spending time with friends and family. But to fulfill those goals and maintain a comfortable, secure lifestyle, you need to protect your purchasing power in retirement.
Purchasing power is essentially what it sounds like: the value, or buying capacity, of your fixed retirement income in the face of inflation. If your income stays the same but prices double, your purchasing power is cut in half — not an ideal scenario.
To help you learn how to preserve your purchasing power — even in today’s uncertain economic climate — GOBankingRates spoke with financial experts.
1. Plan Wisely for Taxes
For Nicolette Davicino, CFP, EA, financial advisor at Armstrong, Fleming & Moore, one of the savviest moves retirees can make is avoiding unwanted tax-season surprises. That means considering all income sources — even without a paycheck.
“Drawing from Roth IRAs or taxable accounts in low-income years, and converting traditional IRAs to Roth IRAs before required minimum distributions begin, are powerful ways to keep taxable income lower in the long term,” she said.
Davicino also urges retirees to consider how the passage of the “Big Beautiful Bill” (also known as the One Big Beautiful Bill Act) affects tax laws. While Social Security isn’t entirely tax-free, most retirees living on modest incomes — a combination of Social Security and required IRA withdrawals — will owe little to no federal tax, thanks to a new senior deduction.
“For higher-income retirees who exceed the phaseout threshold, smart tax planning becomes essential,” she said. “Strategies like capital gains harvesting, delaying Social Security, and optimizing the timing of withdrawals can help maximize income and reduce tax exposure.”
She added that retirees should regularly review their investment portfolio to ensure it aligns with changing income needs.
“For example, municipal bond interest is generally exempt from federal income tax, making it a valuable tool for preserving purchasing power in retirement,” she said.
2. Look for Sources of Guaranteed Income
According to Tom Buckingham, chief growth officer at Nassau Financial Group, today’s retirement is nothing like that of previous generations.
Retirees now live longer and face more unpredictable markets, which means their financial strategies must go beyond simply preserving savings — they need to ensure long-term income stability.
“If you want to boost your income in retirement, consider delaying guaranteed sources like Social Security and fixed indexed annuities,” he said. “Waiting can increase future payouts and, with the right timing, can give you more flexibility.”
Retirees concerned about inflation should consider fixed indexed annuities with cost-of-living adjustments, which help protect purchasing power.
“In effect, you’re turning longer lifespans into financial strength — not risk,” he said.
3. Prepare for Healthcare Costs
Living longer has its perks — more time for that growing to-be-read list — but retirees need to plan for rising healthcare and long-term care costs that often come with increased longevity.
Aaron Razon, a personal finance expert at Couponsnake, recommends investigating health and long-term care insurance options.
“Investing in health insurance and considering long-term care insurance are some of the most effective ways to plan for your healthcare needs in retirement,” he said. “This approach can prepare you for rising medical costs and ensure that you always have access to quality healthcare when you need it.”
4. Explore Alternative Investments
Many retirees are advised to invest for income in their golden years — ideally before leaving the workforce, so they can benefit from compounding growth.
In addition to traditional stocks and bonds, Jeff Herman, founder and investment advisor at The Jeffrey Group, recommends looking into alternative investments for flexible, non-correlated cash flow.
“Consider the role of alternative investments, which can provide stable cash flow beyond traditional stocks and bonds — especially when unpredictable costs bite,” he said. “Savers need to understand that generating a consistent income stream in retirement is more important than portfolio growth.”
5. Stress-Test Your Plan
Herman also encourages retirees to “shock-proof” their plans by stress-testing different scenarios — for example, a 75% spike in healthcare expenses or a significant market downturn — to make sure their retirement income can hold up.
“The key to boosting purchasing power? Having diversified, income-generating strategies in retirement,” he said.
The Bottom Line
For many retirees, achieving a financially secure retirement while maintaining a comfortable lifestyle is a top priority. Protecting your purchasing power through smart tax strategies, income planning and financial flexibility is essential to making that happen.
This article is part of GOBankingRates’ Top 100 Money Experts series, where we spotlight expert answers to the biggest financial questions Americans are asking. Have a question of your own? Share it on our hub — and you’ll be entered for a chance to win $500.
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