Inflation Could Wreck Your Retirement. Here's How to Tackle It.

For many retirees, the biggest financial threat isn't a stock market crash or a string of unexpected expenses. It's inflation.

Inflation isn't a trend. It's something that tends to persist through the years. And you should know that even modest price increases could erode your buying power in a serious way over time.

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That's why it's important to have a strategy for beating inflation. Here's how to tackle it.

1. Make sure your portfolio can keep gaining value

Many people shift over to conservative investments in retirement. But while cash and bonds can provide stability, they may not be able to outpace inflation. Maintaining at least some exposure to stocks can help your portfolio continue growing.

Of course, the right allocation depends on a variety of factors, including your income needs and risk tolerance. But it's important to keep a portion of your portfolio in stocks for the growth potential. And you can mitigate risk by investing in broad-market ETFs for diversification.

2. Delay Social Security for larger checks

Social Security may be your only guaranteed income source in retirement, unless your job gives you a pension. Maximizing your benefits by delaying your claim could give you more inflation protection.

You're allowed to collect your Social Security checks without a reduction at full retirement age, which is 67 if you were born in 1960 or any year after. But for each year you delay Social Security past full retirement age, your benefits grow by 8% until you turn 70.

Meanwhile, Social Security benefits are eligible for an annual cost-of-living adjustment, or COLA. If you're able to boost your benefits with a delayed claim, any future COLAs that arrive are apt to be worth more to you.

3. Leave room for flexibility

You never know when inflation will surge in retirement. Just look at prices today. Inflation has soared in the wake of the Iran conflict, so prices have risen faster than usual.

If that pattern repeats itself, it's important to be flexible with your spending. During periods of higher inflation, it could make sense to temporarily reduce discretionary expenses or postpone large purchases if you can. You may also want to consider working part-time if rising costs make money tight.

Inflation is unavoidable, and it can put a damper on your retirement plans if you're not prepared. By having a strategy, you make inflation less of a problem and more of a factor you learn to cope with easily.

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