Powell says tariff-driven inflation is a big problem for the Fed.
Federal Reserve Chairman Jerome Powell said the US Central Bank is still struggling to determine the impact of tariffs on consumer prices.
Bloomberg – Politics
If you’re worried about inflation and how it could destroy your retirement, you’re not alone. In fact, a recent report from Gallup showed that as of April, inflation was the most nominated financial problem facing families, with citing 29% of respondents. This is a huge drop from 41% in 2024, but ahead of the shortages in housing costs and money, it remains the biggest concern.
That’s a valuable concern. Consider this: Prices have risen by around 288% since 1980. That means it will cost you a dollar in 1980 or about $3.88 in 2025. it hurts!
Here are several ways to protect retirements that can last for more than 20 or 30 years from inflation.
1. There is an emergency fund
First, make sure you have an emergency fund that can carry you through at least a few months of non-employment. Even if you remain employed, large, unexpected costs such as repairing a large vehicle may have that ugly head. And you don’t want to remove money from your retirement account where your dollars are busy growing for you.
2. Aim for retirement goals and aim for high
Next, consider increasing the size of the eggs in the nest you are trying to build. If you think $1 million is sufficient at the moment, and if you’re retiring in 20 years, remember that $1 million isn’t what you’re before. For some people, $2 million may be a better goal. Take your time to understand how much you need to retire in the future.
That $2 million goal can be achieved if you are actively robbing your money and have a good year.
Source: Calculations by the author.
3. Consider delaying your retirement a little
One way to strengthen nest eggs after retirement is to delay retirement for several years. Please see the table above. If we can reach $741,344 in 20 years, delaying retirement for another five years while continuing to save and invest could potentially reach nearly $1.2 million. This strategy also means shorter retirements. This helps you not run out of money.
4. Include dividend payers in your portfolio
Investing in dividend paying stocks can be a powerful move. Healthy and growing dividend paying companies often tend to increase their payments each year, and those increases will help you keep up with inflation. Their stock prices should also be appreciated over time. It’s win-win!
You don’t even have to be a stock market genius. You can choose an Exchange Trading Fund (ETF) that focuses on one or more dividends. This makes dividend investment easier.
5. Consider I-bond
You can also consider investing in I-bonds, which are characterized by inflation-related interest rates. Treasury’s inflation protection securities, or “hints,” is another possibility that features inflation adjustments. These are not big growers, but they can protect the purchasing power of the income you earn.
6. Consider REIT
If you are looking for income from a portfolio, a wise move for retirees, you may want to look for a Real Estate Investment Trust (REIT). Owning an ETF focused on REITs can also be a good move. Perhaps you should check out the Vanguard Real Estate ETF or the JPMorgan Realty Income ETF.
7. Supports stocks that allow companies to raise prices
If you are investing in individual stocks, give the company behind the stock some thoughts. Consider supporting people who can get away by increasing prices.
Industry often engaged in price wars doesn’t fit this bill, but companies with strong brands often can successfully raise prices because people want those brands.
8. If interest rates are high, maintain some money for “safer” investments
Even if you retire, you can still hold meaningful portions of your portfolio in stock. Because a lot of money is still going to grow for many years. However, it is also wise to keep your years of living expenses “safer” in unstable places like certificates of deposit (CD), high-yield savings accounts, and financial market accounts. This is especially true now when interest rates are still relatively high and you may find interest rates above 4%. This often outweighs inflation.
9. Consider maximizing your social security benefits
One of the best features of Social Security is that it includes an almost annual cost of living adjustment (COLA). To maximize these increases, you may try to maximize your profits. For example, a 4% increase would be higher with a profit of $2,500 than a $2,000 benefit. Be sure to think about when to claim your profits. (However, for most people, it’s 70 years old.)
10. There are multiple income flows when you retire
Finally, you’re aiming to have multiple retirement income streams, so if one is particularly affected by inflation, you might be more dependent on another. These streams may include social security, dividend income, pension income, rental income, and other potential income.
But you do that, plan your retirement and prepare for the impact of inflation over time.
Serena Marangian does not occupy any of the stocks mentioned. Motley Fool has posted and recommended positions in the Vanguard Real Estate ETF. Motley Fools have a disclosure policy.
The Motley Fool is a partner at USA Today, providing financial news, analysis and commentary designed to help people control their financial lives. The content is produced independently of USA Today.
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