Managing Inflation Risk During Retirement With a Comprehensive Financial Plan

Managing Inflation Risk During Retirement With a Comprehensive Financial Plan

10 Jan 2022

A full-cycle investing plan may be able to insulate your financial nest egg against the risk of potentially endless inflation.  Money is gradually losing its value as the federal government’s printing presses spit out one crisp new dollar after another.  Though the money-printing frenzy is certainly stimulating the economy, it is also reducing the value of your hard-earned money.  

Reaching out to a financial advisor in Canton, Ohio to create a comprehensive financial plan may be the inflation-fighting defense your retirement plan needs! Read on to learn more:

Comprehensive Financial Planning for the Uncertainties Ahead

Though most economists agree moderate inflation is likely to continue through the first couple financial quarters of the new year, it is not guaranteed that the U.S. dollar will continue to lose value throughout the entirety of the year or the years that follow.  

Reflation, deflation, or stagflation might occur in ’22, ‘23, and beyond.  Add in the potential for an economic recession here at home, or the prospect of an uncertain market, and the need for comprehensive financial planning becomes even clearer.


Worried about inflation? Contact McGervey Wealth Management and get some inflation-fighting tips!


Instead of spending your golden years perched in front of the television, computer, or radio, watching and listening to financial news updates, let our investment advisors do the work on your behalf.  We analyze the domestic and global economies, gauge inflation, and take note of developments in specific industries to develop your investment plan and execute that plan.  We’ll strategically adjust your portfolio in accordance with inflation, market dynamics, government policy, and economic factors so you can live life to the fullest during your golden years.

Managing the Risk of Inflation With the Right Mix of Investments

The prospect of continued inflation through the new year and possibly beyond should prompt you to learn more about how to choose a fiduciary.  A fiduciary manages money on your behalf, providing straightforward advice that is not tainted by the bias of self-interest and subjectivity.  

At McGervey Wealth Management we take pride in providing investment management and comprehensive financial planning services without guiding clients toward investment products that bolster our bottom line.  Rather, our fiduciaries provide you with a duty of care that guarantees our advice and investment selections are in your financial interest.  

Our guidance will rebalance your portfolio based on the risk posed by inflation.  In most cases, this means shifting money away from low-risk securities toward growth-oriented securities.  If your money is in a bank savings account, regular bonds, CDs, money market accounts, or other relatively safe investments, your nest egg is likely to shrink throughout retirement even if you don’t spend a penny.  

The moral of this story is inflation will slowly whittle away at your money unless you allocate your portfolio by slightly elevating riskroad sign: High inflation ahead during these times.  At a bare minimum, you should move some of your cash and money parked in regular bonds into treasury inflation-protected securities, commonly referred to as TIPS.  TIPS maintain pace with inflation so your nest egg doesn’t shrink as you progress through retirement.

Reallocating a portion of your money into TIPS, growth stocks, mutual funds, and ETFs will diversify your holdings, slightly increase the risk and ultimately help you keep pace with inflation or even outpace it.  Even if you are a conservative investor who shies away from stocks, you should know investing in stocks or at least a basket of stocks through index investing is essential to winning the battle against inflation during retirement. 

Consider Alternative Investments

Strategically shifting some of your money into securities that have more growth potential is only one piece of the inflation puzzle.  There is the potential for a shift of money into stocks, mutual funds, and ETFs to backfire.  If the stock market is bearish in ’22 and beyond, the movement of money into these comparably risky securities will erase some of your hard-earned gains.  However, there is no need to dust off your resume and rejoin the workforce.  

The strategic diversification of your investing dollars through a wide array of value stores mitigates risk, even amidst a bearish market characterized by inflation.  In particular, it may be in your interest to scoop up real estate.  Buy a second home, rent it out or fix it up and flip it and it is nearly guaranteed to appreciate in value.  Even if the property value stagnates in the short term, you can use it as a source of income by renting it out to tenants or using it as temporary lodging for travelers.

Pay Attention to Cost of Living Adjustments and Pivot Accordingly

The cost of living plays an integral role in your financial plan moving forward.  If inflation continues to rise, the products you need for everyday living will also increase in price.  Furthermore, senior housing will become that much more expensive as inflation continues to increase.  Social Security payments are adjusted annually for the cost of living.  The yearly cost of living adjustment, dubbed COLA for short, is not enough to offset considerable inflation as it is calculated only once per year.  There is the potential for inflation to soar to the point that the COLA does not maintain the same pace.  

Our financial advisors in Canton are here to help you plan for the worst-case scenario in which COLA does not rise at the same rate as inflation in the years ahead.  The strategic alteration of your spending and investing combined with shifting money to non-securities such as real estate will help offset inflation that would otherwise make your golden years quite disappointing.  

As an example, the COLA for ’22 is a historically high 5.9%.  However, inflation across the year ahead has the potential to outpace this hike in Social Security payments.  Add in the fact that the standard part B Medicare premium also plays a role in the net COLA increase and the challenge of inflation mitigation becomes all the more complicated.   

At McGervey Wealth Management, we get to know you on a personal level and keep things simple, using common language everyone can understand. To learn more about our full-cycle portfolio management techniques and how higher inflation might affect your retirement planning contact us today.

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More About the Author: Matthew McGervey, CFP®, MBA

As a CERTIFIED FINANCIAL PLANNER™ professional, Matthew has a broad knowledge of personal financial planning strategies and solutions.