If you are thinking about retiring sooner rather than later, high inflation can be a major cause for concern. High inflation diminishes the value of your savings and may disrupt your retirement plans. This is particularly important if you are hoping to retire earlier than the average person. Your retirement period will likely be longer and you’ll need a larger buffer to support you throughout retirement.

In saying that, it is still possible to retire early during periods of high inflation. Here are a few factors to consider in helping you feel confident in your early retirement plan.

Find ways to boost your savings

Once you are retired, you are more vulnerable to high inflation because you have fewer opportunities to increase your income to match the cost of living increase. Maximising your savings before you retire is the best way to set yourself up for a secure future. This can be done by increasing your income or finding ways to cut back on expenses. You may be able to cut back on subscriptions that no longer serve you, or find cheaper suppliers for utilities.

If you are still a few years off retirement, you could consider putting your savings into a Term Investment to help increase returns. Many APS members also use their Term Investment during their retirement years as an additional income stream. With rates of up to 5.50% p.a., a Term Investment is a great way to stay ahead of rising costs.

Learn more about APS Term Investments.

Review your investment decisions 

Different types of investments will perform differently over time, so it is worthwhile looking at your investments and making sure you have the right allocation to ride out any bumps in the market. Returns from shares and property tend to be higher than many other assets. They are riskier but could potentially have a better chance of beating inflation in the long run. It can also be a good idea to have a reserve of cash to draw on so you don’t have to sell your investments during a market downturn.

Your investment decisions should be determined based on your stage of life, your financial position and your retirement plans. We recommend speaking with a Financial Planner to help you make a strategy to suit your unique position. 

Adjust your strategy

If you are nearing retirement during uncertain economic times, it is important to be flexible with your strategy. If Australia experiences a recession, it may be beneficial to delay retirement long enough for your investments to recover. You may also consider taking on a part-time job while easing into retirement to give you confidence in your savings. Everyone’s circumstances will be unique, however, it always pays to be flexible.

If you are worried about high inflation and needing to shift your strategy, it is worthwhile speaking with a Financial Planner who will be able to guide you in creating the best plan for your retirement.

Learn more about APS Financial Planning.

Written by APS Senior Financial Advisor, Paul Hatzigeorgiadis.

Paul has over 25 years of experience in the financial services sector. Over Paul’s history, he has provided advice to an extensive range of clients from wealth accumulators to pre and post retirees advising them on Wealth Creation, Cash Flow Management, maximising Centrelink benefits in Retirement, Personal Insurances, Debt minimisation strategies and Superannuation. Paul is married with an 11-year-old daughter and enjoys spending time with family and friends.  Whether it’s assisting clients to meet their short-term goals or working with them over a longer term, Paul enjoys helping guide his clients with their financial future.