Worried About Inflation? Here's How Retirees Can Gain an Edge.

Even though overall inflation has cooled from the highs seen in recent years, the cost of essentials such as groceries, housing, healthcare, and insurance continues to strain many older Americans' budgets. And while some of that recent pain may be linked to the Iran conflict -- and could therefore ease if things settle down -- inflation is a persistent problem even in the best of times.

The good news is that you're not doomed to fall behind inflation in retirement. Here are three ways you can keep up with or beat it.

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1. Keep part of your portfolio invested in stocks

Some retirees become overly conservative with their investments after leaving the workforce, shifting too much of their savings into cash or low-yield investments. While reducing risk is an important thing in retirement, avoiding stocks entirely could create another problem -- having your portfolio grow too slowly, to the point where it loses to inflation.

Historically, stocks have managed to outpace inflation in the long run. So even though you may be inclined to unload risk in your portfolio once you retire, it's important to keep a portion of your assets in stocks.

That doesn't mean you need to bet on speculative companies. It's OK to focus on established businesses or even stick with broad market or S&P 500 exchange-traded funds (ETFs). But it's crucial to stay invested in stocks to some degree if you want your portfolio to generate gains as you withdraw from it.

One way to offset the risk of investing in stocks, though, is to focus on companies with a strong history of paying dividends. If you're able to collect dividends on a regular basis, those extra payments could help offset volatility in your portfolio. You can choose dividend stocks individually or put your money into dividend ETFs if you're not comfortable hand-picking companies to invest in.

2. Delay Social Security if you can

You can file for Social Security benefits as early as age 62. And you're eligible for those monthly checks without a reduction once you reach full retirement age, which is 67 if you were born in 1960 or later.

But if you're able to delay your Social Security claim past full retirement age, you could set yourself up with more buying power for life. That's because your benefits will get an automatic 8% increase each year you wait, up to age 70.

Not only can a delayed Social Security claim give you larger monthly checks, but having bigger benefits also means getting more money each year as the program's cost-of-living adjustments arrive. So that's really a double win.

3. Give yourself an extra retirement paycheck

Even if you have a nice chunk of savings and a decent Social Security check to look forward to, you may find that when inflation surges, it's hard to keep up. To maintain an advantage, it helps to carve out additional sources of income. And working fits the bill perfectly.

Some retirees take on part-time consulting work, freelance projects, or seasonal jobs. Others turn hobbies into small businesses for extra income.

You can play around with different options to see what's a good fit for your schedule. And you may find that you actually enjoy boosting your income through part-time work that fulfills you.

Inflation is one of those things that's unavoidable. Even during periods when prices aren't rising so rapidly, costs tend to rise nonetheless. If you invest your savings wisely, claim Social Security strategically, and set yourself up with additional income streams by working in some capacity, you can put yourself in a great position to win the battle with inflation and avoid financial stress as a retiree.

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