‘This is a daunting time to retire’: In the age of inflation, there are steps you can take to deal with higher prices

For the last two decades, retiree Brad Hansen hasn’t worried too much about inflation and the loss of purchasing power. That’s because inflation averaged only 2.54% from 2000 to 2009 and just 1.75% from 2010 to 2019, far below the historical average of 3.10%, according to InflationData.com.

Now with inflation rising to levels not seen in 40 years, Hansen is remaining calm, even after the Labor Department reported that consumer prices rose 8.3% for the 12 months ended April 2022. Hansen said the recent spike in prices has not yet adversely affected his finances, thanks to having a plan in place. 

“We’re not panicky investors in the short term,” said Hansen, who is married and spent his business career in corporate finance, including a stint as a sales manager and president of a bank-owned leasing company. At age 65, the Wisconsin resident has three sources of retirement income: part-time work, income from investments, and Social Security. “We always refer back to the retirement plan that we had previously calculated.”

That plan didn’t call for Hansen to retire on a shoestring budget hoping that everything goes right. Instead, his strategy included some wiggle room, a cushion for when adverse events such as inflation arise. “It starts out with having that plan,” he said.