| Inflation and retirement planning go hand in hand—rising prices can quietly impact how long your savings last and how secure your income feels. A thoughtful, tax-aware strategy can help protect purchasing power and provide peace of mind throughout retirement. |
Even though inflation has cooled from recent highs, its impact continues to ripple through retirement plans. Everyday costs—from groceries to travel—remain noticeably higher than they were just a few years ago. That reality leaves many people wondering whether their savings will last long enough to support the life they’ve imagined.
When I talk with my wealth management clients about inflation and retirement planning, one of the most common questions I hear is, “Will my money last?” It’s not just about numbers—it’s about maintaining a lifestyle and a sense of freedom. Retirement should be about enjoying what you’ve built, not worrying whether rising prices will erode your purchasing power.
Inflation quietly erodes purchasing power over time. The same dollar that comfortably covered expenses ten years ago may not stretch as far today. For retirees living on fixed or semi-fixed income, this slow change can meaningfully affect how long savings last.
Even though higher interest rates have improved returns on cash and savings, those returns don’t always keep pace with inflation. That’s why retirement planning for inflation has to go beyond short-term rates. It requires looking at the whole picture; how rising costs, investment returns, and spending patterns interact over decades.
It’s not just about the cost of living today; it’s about preparing for how that cost evolves throughout your entire retirement.
The MIT AgeLab estimates that retirement can last around 8,000 days—more than 20 years. That’s why people doing retirement planning are re-evaluating how they invest to keep up with inflation. For some, this means maintaining a portion of their portfolio in long-term growth investments even after leaving the workforce. A well-diversified plan blends growth assets, income sources, and accessible cash so you can manage rising costs without unnecessary stress.
This combination provides both flexibility and stability—a foundation for managing inflation risk without unnecessary stress.
While inflation is unpredictable, your plan doesn’t have to be. As part of inflation and retirement planning, I use financial modeling—such as Monte Carlo simulations—to illustrate how different inflation rates and market conditions might affect a client’s future income.
We typically test inflation in the 2% to 5% range. Two percent represents the long-term average and the Federal Reserve’s target, while modeling up to five percent shows how a plan performs if inflation remains elevated longer than expected. It’s not about predicting the future; it’s about helping you see how adaptable your plan really is.
For example, one couple I worked with wanted to know whether higher prices might delay their retirement. By modeling several inflation scenarios, we found that small spending adjustments could keep their plan on track.
Regularly updating these models ensures that your plan continues to reflect both personal and economic changes.
At Sachetta, our advisors have both financial planning and tax planning credentials, allowing us to take a comprehensive view of inflation and retirement planning. Managing inflation isn’t just about investing, it’s also about how and when you access your money.
Strategies such as Roth conversions, thoughtful withdrawal sequencing, and tax-efficient investing are all good wealth preservation strategies for retirement. Even small improvements in after-tax income can compound over time, especially during multi-decade retirements.
My goal is to help clients use their money as effectively and efficiently as possible so they can enjoy the life they’ve worked hard to create without the constant worry of rising costs.
I help clients stay proactive by reviewing and adjusting spending over time, maintaining balanced investment strategies, and making tax-efficient withdrawal decisions. This approach helps ensure your retirement plan keeps pace with the changing cost of living and supports the life you’ve worked hard to build.
Everyone experiences “personal inflation” differently, depending on lifestyle, spending habits, and goals. While none of us can control broader economic trends, we can manage how we respond to them.
People make retirement planning mistakes. Failing to plan for inflation doesn’t have to be one of them. Inflation may fluctuate, but confidence comes from preparation. A thoughtful, personalized plan that accounts for inflation, taxes, and cash flow gives you the ability to adjust as life unfolds.
Planning isn’t about predicting the future; it’s about being ready for it. Let’s make sure your retirement plan reflects what matters most to you. Contact us to learn more about becoming a Sachetta client.
FAQsHow does inflation affect retirement planning? What inflation rate should I use in my retirement plan? How can I protect my retirement savings from inflation? Can a financial advisor really help with inflation and retirement planning? |
Sources:
https://fred.stlouisfed.org/series/FPCPITOTLZGUSA
https://www.npr.org/2025/09/19/nx-s1-5539547/grocery-prices-tariffs-food-inflation
https://agelab.mit.edu/blog/plan-retirement-that-could-last-8000-days
About the Author:
Domenica Lurvey, CFP® MSM joined Sachetta in 2023 and works mainly with Wealth Management Clients. Domenica has a Bachelor's Degree in economics and political science, as well as a Master of Science in Management (MSM) Degree from Merrimack College. In her spare time, Domenica enjoys spending time with her friends and family, traveling, gardening, and trying new recipes.