Creating and building assets to strengthen your retirement is significant to your success, but taking the necessary steps to protect those assets is crucial.
Frequently Asked Questions
IRA or 401k investments aren’t adjusted for inflation, but you can adjust how much you withdraw to help cover rising inflation costs. Increasing how much you withdraw each year by a similar percentage to inflation is one way to give yourself your own annual COLA (if you plan correctly). Alternatively, investment options like I Bonds or TIPS (Treasury Inflation-Protected Securities) are designed with inflation in mind. Talking to a financial planner about these options can offer more insights.
Many public-sector pensions offer a COLA for beneficiaries. Not all pensions offer a COLA, especially from private companies. Even if your pension does adjust benefits, there’s also no guarantee it will keep up with inflation rates.
Some annuities include a COLA to help protect against inflation for beneficiaries. Keep in mind that an annuity with a COLA may have other downsides though, like lower payout sums or higher fees. As you can see, there are options when planning ahead for inflation. It’s always a good idea to talk to a financial advisor to help ensure that your retirement plan takes into account this key variable.
