Remember when a gallon of gas was just $0.63? That was back in 1978! Times have changed, and with rising prices, inflation is something on many minds. It’s important to protect your savings from losing value during inflationary times. Inflation unquestionably affects how much your retirement dollars will be worth. Over time, it can seriously dwindle your nest egg, which is the opposite of the direction you’re trying to go in. 

Here are some options that might help: 

Treasury Inflation-Protected Securities (TIPS):

These are government bonds that adjust with inflation. You can buy them in $100 increments and terms of 5, 10, or 30  years. They can also be sold on the secondary market.  

Precious Metals Funds:

Gold and other metals often rise in value during inflation.  Investing in funds that include metals like gold, silver, platinum, and palladium can be beneficial.

Commodity Mutual Funds:

During inflation, raw materials like corn and wheat can go up in price. Consider mutual funds that focus on agricultural and energy commodities.  

Equities and Equity Funds:

Companies in sectors like industrials and materials may perform better during inflation, and specialized mutual funds might target these.

Real Estate and REITs:

Real estate values and rental incomes often increase with inflation, and Real Estate Investment Trusts (REITs) offer a way to invest in this area.

Inflation’s impact on retirement 

• According to research, a 1% inflation rate over twenty years would eat up $34,406  of your Social Security benefits alone (LIMRA, 2016). If the inflation rate increases to 3%, the difference would be over $117,000.
• In 2018, the Centers for Medicare and Medicaid Services estimated that healthcare expenditures increased by 4.6% over the previous year. Over that same period,  inflation averaged 2.4%. Translation? Even when inflation is low, you may be hit harder than others because the expenses that affect you most continue to rise.
• Healthcare isn’t the only thing that can drive up your expenses. Housing, travel,  and supporting children and grandchildren also influence how much you spend and how fast your retirement savings are depleted.  

How to mitigate inflation’s effects

Consider downsizing

Trading in a larger home for a smaller one, even if the mortgage is paid of, reduces your costs associated with property taxes, utilities,  homeowners insurance, and maintenance.  

Expand your investments

 Add investments to your portfolio that may increase in value as inflation rises, such as Real Estate Investment Trusts (REIT) or energy sector stocks.  

Balance with bonds

Balance stock investments with more conservative options,  such as bonds.

The information contained in this material is for general information only and are those of the author, and not a recommendation or solicitation to buy or sell investment products.  This material was developed and produced by Levitate, which is not affiliated with the named broker-dealer, Command Wealth Management, or Cambridge Investment  Research. For a comprehensive review of your personal situation, always consult with a tax or legal advisor.  

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