5 Ways To Handle Skyrocketing Inflation and Plummeting Savings Rates in Retirement

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Inflation was likely part of your retirement planning strategy. However, you may not have been prepared for the levels its reached in recent years.

Thankfully, inflation appears to be on the decline. In September 2024, the inflation rate was 2.4%, a vast difference from the peak of 9.1% in June 2022, according to the U.S. Bureau of Labor Statistics.

Despite this, you might still be recovering from having higher costs — and potentially having to dip into your savings to cover expenses. Speaking of savings, your interest earnings may not be as high as they once were due to recent Fed rate cuts.

Given this, it might be time to find a few new ways to manage your retirement nest egg. Keep reading for five ideas to help hold onto your money amid inflation and plunging interest rates.

Adjust Your Spending

This might sound obvious, but it’s often easier said than done. Take a look at your spending habits to find relatively easy ways to spend less.

For example, if you dine out regularly, try to eat in one or two extra meals per week. You could also review your credit card statement to see if you’re paying for any subscription services you’re no longer using.

It might not seem like a lot, but cutting even small expenses here and there can add up. Periodically auditing your spending is always a good idea, even when you’re not trying to combat a rising cost of living.

Delay Big Purchases

If you can avoid it, right now might not be the best time to make a major purchase. Whether you were planning to buy a second home, boat, RV or any other big-ticket item, consider waiting a bit.

Even if you can afford the purchase, it might be best to wait until the economy recovers a bit more. You don’t want to spend the money, only to have an unexpected downturn leave you wishing you’d just left the funds in your account.

Diversify Your Investments

If you haven’t diversified your portfolio lately, it might be time to do so. This can ensure your investment strategy reflects both the current economy and your retirement goals.

Different investment types commonly perform differently at the same time, according to Teachers Insurance and Annuity Association of America (TIAA). Therefore, it’s important to ensure your portfolio allocation is still working for you.

Having too many risky investments or too few conservative investments can negatively impact your nest egg, also according to TIAA. Therefore, it’s a good idea to meet with a financial advisor to make sure your portfolio is properly balanced.

Get a Side Hustle

Whether you’re looking to supplement your spending money or rebuild your savings, a side hustle can be an easy way to earn extra cash. Instead of fully coming out of retirement, you can choose a gig that looks interesting and work on your own time.

For example, pet sitters earn an average of $25 for a 30-minute visit, according to Scout, a software company for pet services. Another idea, tax preparers earn an average of $18 per hour, according to ZipRecruiter.

The great thing about a side hustle is there’s something for everyone. You can use skills gained during decades in the workforce or simply opt for a gig that aligns with your passions or just seems easy — whatever works for you.

Find Ways To Save

If you’re not currently clipping coupons — paper or digital — shopping sales and seeking out senior discounts, it’s time to start doing so. This is a quick and easy way to hold on to your hard-earned money.

Even if inflation hits rock bottom and savings rates skyrocket, it’s still wise to seek out ways to save. There’s no need to pay full price, when you can get the same thing at a discount.

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