Record Inflation Leaving You Worried? Here's How to Stop It From Ruining Your Retirement

According to recent data from Charles Schwab, more than half of 401(k) participants cite inflation as one of the biggest barriers they have to their ability to have a comfortable retirement in the future.

It's a valid concern. Even people who diligently save in a 401(k) retirement plan for decades may feel like their nest egg is not enough to cover rising expenses. Here are some ways to stop inflation from ruining your retirement years.

Understand the high cost of retirement expenses

The first step in understanding inflation is to understand your expenses; for example, many people are surprised by increases in housing, health care, and retirement costs. According to Fidelity data, retirees 65 and up will spend approximately $172,500 on health care and retirement. That number doesn't include long-term care.

Additionally, even though many people feel like their housing costs should be lower and retirement, especially if they've paid off their mortgage, many retirees are surprised by rising property taxes and utility expenses. However, being aware of these costs is the first step in making a plan to preserve your nest egg as much as possible, even amid high inflation.

Diversify into equities and real assets that outpace inflation

One option for insulating your 401(k) against inflation is to diversify into equities and real assets that outperform inflation. That means instead of keeping money in cash or bonds, you invest it in the market. Of course, there are no guarantees when you invest in the stock market; however, it has returned approximately 10% on average over the last 100 years. That is one way to outpace inflation, which was 2.7% in 2025.

Consider TIPS (Treasury Inflation-Protected Securities) or I-bonds

I-bonds are government bonds that adjust interest based on inflation, which is a conservative way to ensure your money doesn't lose value. There are also TIPS, which stand for Treasury Inflation-Protected Securities. The U.S. Treasury sells TIPS for 5, 10, or 30-year terms, and the purpose of these securities is to protect your savings against inflation. Consulting with a financial planner can help you understand whether or not including these securities in your portfolio is beneficial for you.

Delay Social Security payments if possible

Another option is to delay your Social Security payments as long as possible. For example, if you decide to take Social Security at age 70, you will earn 132% of the amount you would've had if you had taken it at 66. Having more money in this form of guaranteed income can provide peace of mind in retirement.

Of course, many retirees make the mistake of relying too much on Social Security. Though Social Security does include a cost-of-living adjustment annually, the average monthly benefit for retired workers as of January 2026 was $2,071, which is not enough for most people to live on. This is especially true if retirees still have mortgage payments.

Develop a flexible 401(k) withdrawal strategy

Most people spend their working years building their retirement fund and then fail to plan a withdrawal strategy. Having a withdrawal strategy in retirement is important for many reasons, including optimizing taxes and protecting your nest egg.

Some people have a rigid withdrawal strategy, adhering to the 4% rule. However, developing a flexible withdrawal strategy that adjusts your withdrawals based on market performance can be a better way to hedge against inflation.

Tips for workers who plan to retire soon

If you're planning to retire soon and you're worried about inflation, tax-advantaged accounts like 401(k)s and IRAs are still among the most efficient savings vehicles. Using these accounts to your advantage and making catch-up contributions can go a long way toward helping you maximize your retirement account before you leave the workforce.

It's also a good idea to make sure that you have one to two years of an emergency fund set aside. That way, you won't have to withdraw your 401(k) money when the market is at a low point.

You can't avoid inflation, but you can prepare

Ultimately, you can't avoid inflation. It is a known risk that affects many people's portfolios. However, with appropriate planning and a thoughtful portfolio allocation, it is possible to protect your nest egg against inflation. Investing in assets that outpace it is one strategy. Other strategies include paying close attention to your spending habits and withdrawal plan.

Bottom line

Everyone deserves a stress-free retirement one day, but fears about inflation can make your retirement savings feel stretched thin. If you're worried about your 401(k) balance lasting throughout your retirement, consider consulting with a financial advisor. A financial advisor can review your assets, goals, and current spending patterns and recommend the best withdrawal strategies.