How Could Inflation Affect Your Retirement Plans?

You’ve probably heard about the historically high inflation rates hitting the U.S. right now, leading to rising prices of gas, groceries and even home utility bills. In essence, you’re paying more for the exact same goods and/or services (cue the sad trombone).

But inflation also has long-term consequences that might not seem obvious at first – like impacts to your retirement plans. 

Today, we’ll explore the stats behind those record-high inflation rates, how it could impact your retirement savings, and steps you can take to stay on track for your financial future.

Historically High Inflation Rates

Let’s look at the cold, hard numbers of inflation:

In June of 2022, inflation rose to 9.1%, a gain not seen since back in the early 80’s. Among the hardest-hit items are housing costs, gasoline and food. At the same time, salary increases have yet to match the pace. This leaves consumers with less purchasing power overall.

On top of those challenges, the market officially turned bear earlier this year when securities prices plummeted more than 20% from their most recent high, resulting in downturned investments and widespread economic anxiety.

Related: How to Keep Your Cool (and Save Money) During a Bear Market

To recap: Americans have less money from their investments, and the money they do have isn’t buying as much as it used to – this is exactly why the term “dumpster fire” was invented.

So how can you save for your long-term goals and stay on track for your financial plans during these volatile times? We’ve got you covered.

3 Tips to Keep Your Retirement Plan on Track Amid Inflation

If inflation is putting a dent in your retirement planning, there are still steps you can take to help stay on track toward your goals – let’s dive in.

1.  Don’t withdraw your investments

If you’re still a long way from retirement, you have time to ride out the volatile market and let inflation cool down a bit. Remember, if you don’t withdraw the money from your retirement fund, you haven’t technically taken any loss. 

Many people see their net worth dropping and panic-sell their securities. However, past market performance shows us that usually things level out and, most likely, your accounts will recover. If you’ve got time to spare, your best move might be to just sit tight for the time being.

2. Keep saving for retirement

Even if your monthly retirement contribution dropped from $500 to $50, it’s still worth saving. While it may seem like a small amount now, all your contributions added up over time can make a huge difference in your eventual retirement lifestyle. 

There are also several tips and strategies you can use to rearrange your budget, including refinancing your student loans or selling those old Pokémon cards you collected as a kid. 

Related: 6 Easy Ways to Boost Your Savings

3. Connect with an advisor

Lastly, it may be in your best interest to connect with a financial professional who can help tailor your retirement plan around your long-term goals and immediate needs. 

Advisors have experience creating retirement plans in times of high inflation and volatile markets, so they can give first-hand advice on how best to move forward with your retirement fund. 

In fact, you can work with an advisor who specializes in retirement planning to find out your next best move. (Psst! The Lasso app lets you filter advisors based on their expertise!).

Inflation is like that boogey monster hiding under your bed, except it’s also at the grocery store and gas station and pretty much everywhere that accepts credit cards. The important thing to remember? These high inflation rates (probably) won’t last forever, and in the meantime, there are moves you can make to stay on top of your retirement goals.

Plan Your Retirement with Lasso

We’re here to help you save toward your goals and gain more financial know-how along the way. Click here to download the Lasso app today.


Comments are closed.

Up ↑