As the economy is getting back to normality post-covid restrictions, inflation is rising up to a 13-year high. The Federal Reserve still says the inflation is transitory. But there are signs policymakers are nervous about out of control inflation and have already brought forward the timeline for raising interest rates, a sign action is needed to cool down the economic rebound and inflation. But will the Fed be actually able to tame inflation?
The risk is that increasing inflation could eat away all your retirement savings but here we have 4 ways how to protect you:
1. Buy Real Estate
Investing in real estate during your retirement can provide you with another stream of income and give you more financial protection. You will have rising cash flow from renting out your properties.
2. Stay Invested
Many retirees forget that they should be continuing to invest their money during their retirement. Remain being an investor throughout your retirement. That money is your longevity insurance. There is no absolute guarantee that stocks can always outpace inflation, but realign your portfolio to have a diverse mix of investments because it is always a great way to create a safer portfolio and protect it from inflation.
3. Keep Working
If you maintain a job during retirement, you will be collecting a salary and benefits that rise with inflation. You will be rather increasing your nest egg than depleting it each year to cover expenses. At least consider a part-time job or consulting from time to time.
4. Delay Social Security
Social Security is a huge part of many people’s retirement funds. About 50% of retirees rely on Social Security for more than 50% of their retirement income. Avoid to apply for early Social Security payments. Each year that a person delays claiming up to age 70, their monthly Social Security check goes up 7-8%. This means that monthly benefits claimed at 70 are at least 76% higher than those claimed at 62.
Protecting your wealth for retirement should always be a priority!
Sven Franssen