Last year, you may not have worried about market downturns or cost-of-living increases, but with market volatility and inflation threatening retirement plans this year, plus continued rate hikes from the Fed, it’s important to make sure you know your options when it comes to protecting your wealth, earning income, and knowing the difference between both.

Keeping Up with Inflation           

In short, income is the foundation of how we cover our costs of living. But when inflation causes prices to rise, the fixed income you may have been receiving or planned to receive in your retirement might not stretch as far as you thought. Unfortunately, you can’t stop inflation, but you can prepare by talking to your financial advisor to see how you can adjust your income streams.

A common strategy used by retirees to adjust their income to match inflation is incorporating I-bonds or Treasury Inflation-Protected Securities into their portfolios. These investment vehicles pay out interest distributions based on current Consumer Price Index data, which tracks inflation. For some, these can be a great way to maintain income on pace with inflation. Another investment vehicle to ask your financial advisor about is annuities. An annuity is an insurance-based financial product designed to provide you with guaranteed income and may even come with inflation-adjusted income payments.

However, income isn’t the only thing to be aware of when it comes to weathering inflation and market volatility.

Wealth Erodes from Inflation, Too

Protecting your wealth is a different challenge than earning income. If you’re looking to protect against inflation and taxation, transferring your investments into a vehicle that gives you taxable income may be counterproductive. There are better ways to store and protect your wealth without paying income tax on it.

If you’re more concerned with wealth protection than covering costs of living, consider talking to your financial advisor about including new asset classes into your portfolio. Although past performance doesn’t indicate future results, there are certain wealth-protecting strategies that have served retirees well during inflationary or volatile periods. Ask your advisor about asset classes that have seen stability or price increases during this inflationary and volatile market period.

But this conversation only scratches the surface. There are so many ways in which you can address these issues, and a fiduciary financial advisor will have professional advice for you that is tailored to your specific financial situation and goals. So, talk to your financial advisor today to get your assets one step closer to meeting your financial goals.