Worried Inflation Will Wreck Your Retirement? Do These Things.

Inflation isn't a new concept by any means. But the reason it's been in the news so much is that in recent years, it's been rampant.

Granted, these days, we're not seeing the same levels of out-of-control inflation we were back in 2022. But living costs are still rising at a rapid clip, and that's making a lot of people nervous -- both about paying their bills in the near term and affording their living costs in retirement.

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It's natural to worry about inflation in the context of retirement, especially since at that stage of life, you may not be earning a paycheck from a job. That means your savings will really need to hold up.

Here are a few things you can do to avoid a scenario where inflation wreaks havoc on your retirement.

1. Invest aggressively while you're still working

If you want to be able to live comfortably in retirement, you'll need a decent-sized nest egg. But inflation may be making it difficult to contribute to an IRA or 401(k) plan as much as you'd like to.

To make the most of the money you are able to contribute toward retirement savings, choose your investments wisely. It's generally a good idea to go heavy on stocks during your wealth accumulation years, despite the risks involved. And remember, when you're many years away from retirement, near-term market volatility becomes more of a temporary problem.

If you're going to load up on stocks for your retirement portfolio, make sure to diversify. An easy way to do so is to invest in S&P 500 (SNPINDEX: ^GSPC) index funds, which give you broad market exposure.

But to show what a stock-heavy portfolio might do for you, say you invest $500 a month for retirement over 40 years at an average annual 7% return, which is a few notches below the market's average. That leaves you with a balance of $1.3 million.

2. Maintain an income-producing portfolio during retirement

It's generally a good idea to scale back on stocks once you retire and invest less aggressively than you did during your working years. But it's also important to make sure your retirement portfolio has inflation-beating potential.

To that end, don't dump your stocks completely. You may want to maintain a 50/50 mix of stocks and bonds. And within each category, look for efficient income producers.

Retirees who are worried about taxes as much as inflation can benefit from municipal bonds, which offer the benefit of federally tax-exempt interest payments. And on the stock side of your retirement portfolio, consider maintaining a strong position in dividend stocks for the ongoing income.

3. Delay your Social Security claim

One big problem with Social Security is that the program's annual cost-of-living adjustments (COLAs) often do a poor job of keeping up with inflation -- even though COLAs are actually measured based on inflation. So a good way to make up for that is to delay your claim.

You're entitled to your monthly benefit without a reduction at full retirement age, which is 67 if you were born in 1960 or later. But for each year you delay your claim beyond that point, your benefits grow 8%, until you turn 70.

Larger Social Security checks for life give you more long-term buying power. So if even COLAs continue to fail seniors in the context of matching inflation, bigger benefits lend to more buying power regardless.

Inflation is definitely something you should factor into your retirement planning. But you don't have to let it scare you. Instead, take these steps to beat inflation and help ensure that you're able to live comfortably later on in spite of it.

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Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.