Inflation is a major consideration in retirement planning. It erodes the purchasing power of money over time and can adversely impact your retirement savings. The situation can worsen if you haven’t considered longevity and outlive your retirement savings.

Also Read: How Social Robots Are Helping Senior Citizens Fight Loneliness

Many factors influence inflation. However, what could hurt the most is the rising medical costs in old age. These factors show that your retirement corpus must be large enough to handle higher expenses, be it healthcare or living costs. Thus, inflation can clearly derail your retirement plans.

Additionally, consider another aspect. Social security benefits, which are adjusted for inflation, may not fully keep up with the actual increase in living expenses. In that situation, the returns on your investments will not be adequate enough to sustain a desired lifestyle in retirement.

Therefore, you should consider investing in assets that have historically provided inflation-beating returns, such as mutual funds, stocks, real estate, and other financial products.

Also Read: When Does Capital Gains Tax Apply On An Inherited Property?

Here are a few points to consider regarding inflation when planning for retirement savings:

Invest In Assets That Outpace Inflation: By generating returns that exceed the rate of inflation, you can ensure your retirement corpus is sufficient enough to handle inflationary pressures in the future. For instance, you can invest in assets such as equities, mutual funds, real estate, high-yield long-term bonds, etc., to safeguard against inflation.

Rebalancing Your Portfolio Often: By evaluating and rebalancing your portfolio frequently, you can ensure that it stays in line with your long-term financial objectives, including fighting inflation and your risk tolerance.

Postpone Withdrawing Social Security Benefits: By postponing the withdrawal of your social security benefits, like pension plans, you will allow the accumulated funds to accrue more interest, which may result in a larger corpus when you eventually decide to exit the scheme. So, consider delaying your exit from an investment scheme to earn more and safeguard your corpus against inflation.

Also Read: IRDAI Removes Upper Age Limit For Buying New Health Insurance Products: Know Benefits For Seniors

Consider Withdrawal Frequencies: To compensate for inflation, retirees may need to modify the pace at which they withdraw money from their retirement funds. This might entail taking a lesser annual withdrawal to ensure they don’t outlive their assets.

Risk Management And Diversification: Investing across a range of asset classes and geographies can help disperse risk and lessen the effect inflation will have on retirement funds.

After all things considered for investments, inflation should be taken into account when making retirement plans. By implementing the best strategies to mitigate inflation, seniors could better protect their retirement corpus and ensure financial stability post-retirement.