Worried About Inflation in Retirement? Try These Investments to Beat It.

Building up a retirement nest egg is crucial so that you have money to live comfortably once you stop collecting a paycheck from a job. But it's important to make sure your money lasts in retirement. And if there's one thing that may get in the way of that, it's inflation.

Inflation can drive living costs up substantially over time. And the good news is that Social Security benefits are protected from it thanks to the program's annual cost-of-living adjustments.

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But it's important to give your retirement savings a leg up on inflation, too. If you're worried that inflation will erode the value of your nest egg over time, here are some investments worth looking at.

1. Growth stocks

You'll often hear that stocks -- particularly growth stocks -- are a risky investment because their value can fluctuate substantially. And that's very true.

It's not a good idea to invest the majority of your portfolio in growth stocks as a retiree. But it may be a good bet to keep a portion of your investments in growth stocks so your portfolio continues to gain value from year to year.

If you're going to do this, though, make sure to diversify. Don't simply load up on growth stocks within the same market segment. And also, maintain a good amount of cash as a hedge against market volatility. This way, you won't necessarily have to sell these assets when they're down to cover living costs.

2. Dividend stocks and ETFs

Although all stocks carry risk, dividend stocks can be a bit less risky than growth stocks. The reason? Companies that pay dividends aren't necessarily chasing rapid growth. And the extra income in your portfolio can serve as not only a hedge against inflation, but against market volatility.

If you're not sure which dividend stocks to choose, you can load up on dividend ETFs instead. These may offer better diversification. Otherwise, aim for companies that have consistently paid a dividend (or better yet, increased theirs) for many years.

3. REITs

Property values tend to rise over time. And they also don't necessarily rise and fall in line with the stock market. That makes real estate another potentially good inflation-beating investment for your retirement portfolio.

This doesn't mean you should go out and buy rental properties, though. You may not want to do the work involved in maintaining one. And with physical property, you run the risk of having to make costly repairs or deal with other expenses.

Rather, as a retiree, you may want to look at real estate investment trusts, or REITs. The nice thing about REITs is that they're required to pay at least 90% of their taxable income to shareholders as dividends. This means you may get to enjoy a steady stream of income without having to do much work other than keep tabs on your portfolio.

Have a plan to beat inflation

It's natural to want to invest your portfolio in a somewhat conservative manner in retirement -- especially if you're happy with the savings balance you're starting out with. But if you don't invest savvily, your savings might lose buying power through the years, especially if there's a period of rampant inflation like there's been in these past few post-pandemic years.

A better bet? Set yourself up to outpace inflation and avoid losing out on buying power.

You can still keep some of your assets in safer or more stable assets like cash and bonds. But the options above could allow your portfolio to keep growing even as you're taking withdrawals, allowing you to enjoy a rewarding retirement and avoid financial stress.

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