Lately, it feels like we’ve all become amateur economists, thanks to a fresh wave of global disruptions. In 2026, tariff volatility has surged: 72% of trade pros now say U.S. tariff swings are the top disruptor, up from 41% last year. That’s reshaping supply chains, companies are treating logistics delays and customs hold-ups as enterprise-level risks, not just minor headaches.
You may have had to adjust your budget to compensate for rising prices, but have you considered shoring up your retirement savings against the risk of inflation?
Inflation and Your Buying Power in Retirement
Inflation impacts the “real value” of investments in your retirement plan because the same amount of money may give you less spending power later. If your expenses are $2,000 per month now, you might need $3,500 during retirement, just to maintain the same quality of life — all thanks to inflation.
Countering Inflation in Your Retirement Portfolio
If you’re worried about how inflation may impact your 401(k) performance and retirement plan, there are some things you can do to compensate, increasing the chances that you will have more spending power in your golden years.
- Look for investment products that yield the same returns as the rate of inflation, or greater. When inflation is historically 2% to 3% annually, keeping most of your money in a bank account or CDs may not cut it. Look for investments likely to have higher annualized returns than inflation.
- Diversify your 401(k) portfolio between stocks, bonds and mutual funds. Not all asset classes and individual investments are equally impacted by inflation. Diversifying can help you manage your risk tolerance while still staying ahead of inflation.
- Look at treasury inflation-protected securities (TIPS). If you’re concerned about risk, TIPS can help. These are treasuries that offer returns designed to keep pace with inflation, allowing you to at least see returns that preserve your buying power.
- Consider investing in gold. Even though gold is sometimes thought of as a hedge against inflation because it traditionally moves opposite to the U.S. dollar, this isn’t always the case. When diversifying your assets, consider gold, but be wary of relying too heavily on it.
- Identify sectors with superior performance. Some sectors, like energy and commodities, often beat inflation. Including funds or stocks in these sectors in your portfolio can sometimes help mitigate inflation risk.
Inflation Impact on Retirees
Inflation can pose a unique challenge for retirees and those nearing retirement because income often becomes less flexible just as expenses become more unpredictable. When you’re working, rising prices can sometimes be offset by raises or job changes. In retirement, however, many people rely on fixed or semi‑fixed income sources, such as pensions, annuities, Social Security, or systematic withdrawals from savings, which may not keep pace with higher costs over time.
Even modest inflation can have a meaningful impact over a long retirement. As prices rise year after year, everyday essentials like food, utilities, healthcare, and personal insurance can take up a larger share of your budget. Healthcare costs, in particular, tend to rise faster than overall inflation, which can strain retirement plans if they’re not accounted for in advance. What feels affordable at the start of retirement may become more difficult to manage 10, 20, or even 30 years down the road.
Inflation can also affect how long your savings last. If withdrawals increase to cover higher expenses while investment returns struggle to keep up, your nest egg may be depleted sooner than expected. This risk is especially important for retirees who are heavily invested in cash or low‑yield assets, which may offer stability but little protection against the eroding effects of inflation.
That’s why it’s important to talk with a financial professional about strategies designed to help manage inflation risk, particularly if you plan to retire soon. These strategies may include maintaining some exposure to growth-oriented investments, building flexibility into your withdrawal plan, coordinating Social Security timing, or using income sources that have the potential to adjust over time. Planning ahead can help you preserve purchasing power, protect your lifestyle, and feel more confident that your income can support you throughout retirement.
