How To Beat Inflation in Retirement: Efficiently & Legally

When you retire, you simply want to rest, re-energize, and enjoy your sunset years in peace. And as somebody who worked extremely hard during your productive years, chances are that you have saved up your money somewhere to enable you live comfortably; long after hanging the boots. But what if we told you that your money is silently getting robbed from you even as we speak?

Yup, that's exactly what happens. The dollar as we know it has lost 98% of its value since 1970. That is to say, if you had kept your retirement fund in cash, 98% of it would have been stolen over time. Yikes.

Who is the culprit? Well, the biggest culprit usually is inflation. Meaning if you want to conserve your hard-earned wealth, you have to learn how to beat inflation in retirement. And here’s how:

The Science of Beating Inflation in Your Retirement Years

Since the days of the first world war, the US inflation has maintained an average of 3.1%. In 2022, that figure is at around 4.5%. And what’s more, there was a time in the 70s when inflation rates were at 10+%. Yup, you read that right.

To beat inflation, you simply need to ensure that your money is gaining at least 5% per year. And here now are some strategies on how to go about this.

Banking On Precious Metals

Rightly or not, precious metals have earned the reputation of being a reliable shield against inflation. Talking about precious metals, we’re referring to the big 4 i.e., gold, silver, platinum, and palladium.

Let’s take an example. In 1970, an ounce of gold would cost you $35. Today, the same quantity of gold will cost you 54 times more i.e., $1800+.

Compare that to the $35 currency that is currently worth $1 in purchasing power and you’ll see just why precious metals are so important for long-term investments.

When you want your money to grow, you have to invest in assets that have a great future ahead. Gold has time and again proven its ability to weather bad times. In fact, its value tends to rise steadily during recessions.

The other three precious metals (silver, platinum, and palladium) are known for their rising industrial use.

Palladium, for instance, is becoming more and more popular, especially with the advent of electric vehicles. In fact, at the moment, palladium has been offering better returns than gold (only that it's a bit more volatile).

Long story short, it makes perfect sense to diversify some of your wealth into precious metals as a way to beat inflation in your sunset years. 

Rent Out Your House

Income-generating real estate is probably the best weapon there is for hedging against inflation. Rent prices tend to mimic inflation rates. In other words, if you rent out your house, you simply make inflation work for you (virtually increasing your income even as inflation rises).

Just to put things into perspective, despite the current hard economic times, rent prices in some cities have risen by more than 30% in recent years.

Besides that, with rental real estate, it is always possible to pass down the operating expenses to your tenants. This way, you’re insulated from things like maintenance and utility fees which tend to rise with inflation.

And what’s more, if the location of your house is good, it will not be difficult to raise the rent over time without scaring away your tenants.

Can’t afford to give up your entire house for rent? Well, you can even rent out parts of it or have it listed on Airbnb for the same.

Give Treasury-Inflation Protected Securities a Short

Unlike your ordinary treasury bills that often perform below the inflation rate, the Treasury-Inflation Protected Securities (TIPS) are designed to protect investors against a loss of purchasing power over time.

TIPS are normally indexed to an inflationary gauge thereby helping them mimic changes in inflation pressure over time.

Basically, the value of your principal amount will rise as inflation rises (and reduce as inflation reduces). This ensures that there is a commensurate rise in your real wage thereby offsetting the negative effects of skyrocketing product prices.

TIPS are government-backed and have been around since 1997. Worth noting, however, is that their interest rate is normally a fixed amount, it is only your principal amount that varies.

Using Stocks to Hedge Against Inflation

Stocks are among the best assets to hold when consumer prices are going through the roof. This might sound like an unfounded theory until you look at how the S&P 500 has been faring over time.

The average annual return of the index is roughly 10% while our average inflation rate stands at 3.1%.

These figures confirm that investing in stocks is not only a viable way to beat inflation in one's retirement age but also to stay ahead of it.

But, there is a catch! Equities can be volatile, unlike bonds. So, the idea is to invest after thorough research in order to ensure that you’re buying equities from companies with a promising future.

For example, companies in emerging industries might be ideal for speculation. We’re talking about BioTech and the electric vehicle industries among others.

Reduce Your Expenses

For sure, no matter how hard you try, you may not always be successful at beating inflation if your lifestyle is expensive. As inflation is characterized by a corresponding rise in the price of goods and services, it also means that the more you consume, the more you allow inflation to eat into your wealth.

So, the secret is to shrink your lifestyle wherever and whenever possible. This might be the perfect time to live in a cheaper neighborhood, for instance, reduce unnecessary commute and give up your cable TV package. Talking about moving neighborhoods, some retirees prefer to move to Arizona and North Carolina i.e., places with lower property taxes and affordable living.

Other than that, try to negotiate for lower insurance costs, especially by taking full advantage of deductibles. Also, if you’re not shy to say your age, you can also qualify for senior discounts in some restaurants, movie theaters, and even clothing stores.

All these measures, as tiny as they seem can go a long way in helping you conserve your purchasing power over time.

Monetize Your Skill

Just because you have retired from your day job does not mean it’s the end of life. Colonel Sanders managed to create KFC during his retirement years by simply commercializing his cooking skills.

You too can do that. For example, if you have some knowledge that you would like to share with others, you can do so on platforms like Udemy. You can even write a book!

Better still, you could sign up on one of the many freelancing websites and be selling your services to willing buyers from across the globe. You can even become an article writer in your area of specialty, a graphic designer, a freelance researcher, and so forth.

No matter which area of life you were previously practicing in, there is always something you can teach the world about it. You just need to package yourself and take advantage of the internet to expand your reach.

You may not earn a fortune from online gigs but they sure are a good way to supplement your income and, therefore, beat the inflation (and boredom).

Turn Your Concepts into Products

Have you ever found yourself wishing that a certain product existed? Or that there was a way to solve a problem that you face in your life? Well, guess what, that in itself is an opportunity for you to capitalize on.

There are countless people who have built consistent streams of income by working with contract manufacturers. Combine contract manufacturing with Fulfilled By Amazon (FBA) and you have a business model like no other.

The beauty about using this model as opposed to going for the brick-and-mortar way is that you can virtually automate everything so you get to enjoy your retirement years even more.

And with most FBA entrepreneurs earning between $1000 and $25000 per month, this can prove to be a viable way to not only hedge against inflation but also grow your income.

Government Bonds

Bonds will never make you rich overnight but they sure are a stable way to invest. Government bonds in particular are backed by the government meaning they have an extremely low risk of default. 

Plus, infrastructure bonds are particularly known for being tax-free. Yup, you read that right. As you are helping the government finance its investments, the government sees no need to tax you for the same.

This can, therefore, increase your potential income and help you hedge against inflation.

And if you are a risk-taker, you can buy bonds issued by foreign governments. Some foreign governments pay as much as 12% in interest rates per annum (which is way better than what we get back here in the US).

But before you take that route, it is important that you understand the culture and political risks that come with sovereign bonds too.


Thanks to the current high rate of inflation, your dreams of living comfortably and traveling the world are under siege. By virtue of being in retirement, you are effectively in a silent battle against inflation. Luckily, there’s a lot you can do about it.

From investing in stocks to renting out your home, there are many ways through which you can gradually breathe new life into your retirement fund one day at a time.