How Inflation Could Impact Your Retirement – And What You Can Do About It
- Marc Lowe
- Mar 10
- 3 min read
Inflation is like that uninvited guest at a dinner party—it always shows up, and sometimes it overstays its welcome. While some level of inflation is normal (in fact, the Federal Reserve targets a 2% rate to keep the economy stable), the past few years have been anything but normal.
Many retirees are feeling the pinch, and for good reason. A 2024 National Institute of Retirement Security survey found that 73 percent of respondents said recent inflation has them more concerned about their ability to achieve a secure retirement. Meanwhile, a separate survey by Northwestern Mutual showed that two-thirds (65%) of U.S. adults say inflation is the dominant concern that could impact their finances this year, and more than four in 10 (44%) rank inflation as the #1 obstacle to achieving financial security
Inflation's Staying Power – Why It’s a Problem
Post-pandemic economic shifts, generous stimulus policies, and increased consumer spending drove prices up across the board. Although inflation has cooled since its peak of 9.1% in June 2022, it’s still stubbornly high. In January 2025, the Consumer Price Index (CPI) showed a 3% annual increase.
That may not sound too bad, but for retirees, certain price hikes hit harder. Food prices rose 2.5%, transportation services jumped 8%, and shelter costs climbed 4.4%. Perhaps most concerning, healthcare costs—one of the biggest expenses for retirees—were up 2.7%.
And while Medicare Part D enrollees now have a $2,000 cap on out-of-pocket prescription drug costs (thanks to the Inflation Reduction Act), that doesn’t cover everything. Many older Americans are still struggling to afford the care they need. A University of Michigan poll found that adults over 50 recognize healthcare expenses as one of their biggest financial concerns.
The Social Security COLA Gap
Each year, Social Security benefits are adjusted for inflation through a cost-of-living adjustment (COLA). But these increases are based on past inflation data, which means they often fail to keep up with real-time rising costs.
For example, in 2025, Social Security recipients received a 2.5% COLA. Unfortunately, with inflation sitting at 3%, that raise is already falling short. Over time, these small gaps add up—between 2010 and 2024, Social Security benefits lost about 20% of their buying power, according to the Senior Citizens League.
What Can You Do?
If inflation has been putting pressure on your retirement budget, here are a few strategies to consider:
Reassess Your Portfolio – A financial advisor specializing in retirement planning can help you explore investments that can outpace inflation.
Consider Part-Time Work – Earning extra income doesn’t necessarily mean going back to a traditional job. Teaching, consulting, or monetizing a hobby can provide flexibility while supplementing your finances.
Be Strategic with Social Security – If you haven’t yet claimed benefits, delaying your claim could increase your monthly payout. Just be mindful of earnings limits if you work before reaching full retirement age.
Keep an Eye on Expenses – Reviewing your budget and cutting unnecessary costs can help stretch your retirement savings further.
A Balanced Approach
Retirement should be about enjoying the life you've worked hard for, not worrying about making ends meet. While inflation poses challenges, proactive planning can help protect your financial security. With the right investment strategies, smart spending, and perhaps a little extra income, you can maintain your lifestyle—even when prices rise.
If you’re unsure about your next steps, consulting a financial professional can provide the clarity and confidence needed to navigate these economic changes.
About The Author
Marc Lowe is Founder of In The Money Retirement Planning. He is a Certified Financial Planner and member of NAPFA National Association of Personal Financial Advisors, XY Planning Network & Fee-Only Network. He works with affluent retirees and those approaching retirement. He has over a decade of experience helping these folks grow their net worth, organize their finances and build better lives for themselves and their families.
The information presented in this Presentation is the opinion of the author and does not reflect the views of any other person or entity unless specified. The information provided is believed to be reliable and obtained from reliable sources, but no liability is accepted for inaccuracies. The information provided is for informational purposes and should not be construed as advice. Advisory services offered through In The Money Retirement, an investment adviser registered with the state of Connecticut.
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