Worried Inflation Will Wreck Your Retirement? Here Are 2 Things to Do.

These days, it seems like people talk about inflation the same way they discuss the weather. Just as many of my fellow East Coasters are tired of this annoyingly snowy winter we've been having, we're also tired of inflation driving all of our bills higher.

The tricky thing is that if you look at the most recent Consumer Price Index reading, you'll see that inflation only rose 2.7% annually in December, which isn't an outrageous jump. The problem is that after several years of very high inflation, even a modest 2.7% increase creates a cumulative effect where costs become too high for comfort.

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If you're worried that inflation will ruin your retirement, that's understandable. But there are steps you can take to protect yourself. Here are two strategies that could give you a leg up against inflation as a retiree.

1. Invest in the right assets

The retirement portfolio you're building today can continue generating returns for you once you're ready to start tapping it. So don't assume that you should move all of your assets into cash once you stop working.

Instead, it's important to come up with an investment mix that allows your money to keep growing nicely while balancing risk. That mix may include bonds, dividend stocks, and real estate investment trusts. If you have consistent income being generated by your portfolio, you should have more leeway to cover your costs in retirement, even if they keep increasing from year to year.

2. Delay your Social Security benefits for larger checks

You might think of your monthly Social Security checks as a constant in the context of your retirement income. But don't forget that Social Security benefits are eligible for an annual cost-of-living adjustment, or COLA.

Now historically, Social Security's COLA have not done the best job of keeping up with inflation. But if you delay your Social Security claim past full retirement age, you can boost your monthly checks by 8% for each year you do that, up until you turn 70. Not only does that give you more money each month as a starting point, but you'll get larger COLAs due to having larger benefits to begin with.

It's natural to worry about inflation's impact on your buying power -- especially once you're no longer earning a paycheck from work. But with the right investments and Social Security filing strategy, you can set yourself up to keep up with inflation and minimize your financial stress later in life.

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