Aging in Atlanta
Aging in Atlanta

Take these steps to manage inflation in retirement

Inflation Surge Continues as U.S. , Hits 4-Decade High, of 6.1% in January.In January 2022, a key inflation gauge closely monitored by the U.S. Federal Reserve jumped 6.1%. .In January 2022, a key inflation gauge closely monitored by the U.S. Federal Reserve jumped 6.1%. .ABC reports that the rise is the latest sign of sharp price increases in the U.S., and the Russian invasion of Ukraine is likely to worsen the situation. .ABC reports that the rise is the latest sign of sharp price increases in the U.S., and the Russian invasion of Ukraine is likely to worsen the situation. .On February 25, the U.S. Commerce Department reported the largest year-over-year increase to inflation since 1982. .This represents an enormous burden for householdsin the U.S., particularly for lower-income families already facing increased costs for food, fuel and housing. .ABC reports that inflation is expected to remain high, and even accelerate, as the Russian invasion of Ukraine is likely to disrupt oil and gas exports. .ABC reports that inflation is expected to remain high, and even accelerate, as the Russian invasion of Ukraine is likely to disrupt oil and gas exports. .The invasion reportedly increases pressure on the Federal Reserve to make up to five or six quarter-point interest hikes this year. .According to the consumer price index released earlier in February, inflation was up 7.5% from a year earlier, which was also a four-decade high. .According to the consumer price index released earlier in February, inflation was up 7.5% from a year earlier, which was also a four-decade high. .In December, the Fed had projected that inflation would decline to 2.7% by the end of 2022. .ABC reports that many economists now see that estimate as increasingly unlikely. .The Fed is expected to release its updated projections for 2022 at its March meeting. .The Fed is expected to release its updated projections for 2022 at its March meeting.
By Anagha Ramakrishnan – for The Atlanta Journal-Constitution
Feb 25, 2022

With the cost of milk rising to an average of $3.56 per gallon, Atlantans are feeling the pull of inflation. The rising costs of goods and services are making finances even harder on retirees who depend on a fixed income.

According to Trading Economics, the inflation rate has risen to 7.5% in January, the highest it has been since February 1982.

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Accounting for inflation is imperative when planning for retirement.

Investing in real estate

According to U.S. News & World Report, owning real estate is a good way to keep up with the rising inflation rate, as real estate accrues wealth over time.

Real Estate Investment Trusts are companies that own commercial real estate and should be considered when evaluating your fixed income. REITs have a greater diversification, can provide larger overall returns and are generally low risk, according to Investopedia. According to CNBC, REITs do well in inflation, as property prices rise with the inflation rate.

Adjusting your retirement plan

Many financial advisors account for inflation when putting together retirement plans.

Including inflation in your retirement plan is a surefire way to make sure you are comfortable even as rates increase. Kiplinger recommends making adjustments in your plan for inflation spikes that will impact your short-term budget.

When making your plan, assume a long-term inflation rate. Spikes in inflation may be hard to predict, but they are usually are short-term. Long-term inflation rates tend to stay around 2%.

There are a few things you can do to manage your expenses during inflation spikes. You could defer payments that are affected by price hikes and use liquid savings rather than retirement to cover payments that you cannot defer. If you expect the hikes to continue, you can make adjustment to your financial plan.

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Social Security

Social security payments are adjusted annually with inflation. There is a huge financial incentive to wait until 70 to begin receiving payments. At that age, you can make the most out of your benefits. The longer you wait, the more your Social Security payment will be.

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About the Author

Anagha Ramakrishnan
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