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By Mark McGregor CRPC®

When you were still working, inflation had a built-in shock absorber. Prices went up, but so, eventually, did your income. Raises, bonuses, and promotions did some of the work for you.

In retirement, that shock absorber mostly goes away. Your income comes from savings, Social Security, and whatever other sources you have built, and only some of it adjusts automatically. That is why rising costs feel different once the paychecks stop.

The good news is that inflation is a planning problem, not a mystery. At McGregor Wealth Management, we treat it as one more variable to build into a retirement plan rather than something to react to after the fact.

What the Past Few Years Have Taught Retirees

Inflation has been a live issue for households for several years now, and 2026 has been another reminder that the pace of price increases can shift quickly.

As of the July 2026 Consumer Price Index report from the Bureau of Labor Statistics, prices were up 3.4% from a year earlier, easing slightly from 3.5% in June. Core inflation, which strips out food and energy, ran at 2.5%. Energy told a different story, sitting 14.7% higher than a year ago.

Averages, though, are not what retirees actually experience. Two details matter more:

• Cost-of-living adjustments lag. The Social Security Administration announced a 2.8% cost-of-living adjustment for 2026, which is tied to price changes measured through the third quarter of the prior year. Benefits catch up to inflation after the fact, not while it is happening.
• Healthcare can absorb part of the raise. The standard Medicare Part B premium rose to $202.90 for 2026, an increase of about 9.7%. For a retiree whose benefit is a meaningful share of household income, a healthcare increase that outpaces the COLA quietly reduces what is left to spend.

This is one of the reasons we talk about Medicare decisions and retirement income in the same conversation rather than treating them as separate files.

The other lesson is subtler. Retirees tend to spend a larger share of their budget on categories that have proven stickier than the headline number, particularly healthcare, housing, insurance, and services. A national average can look manageable while your personal cost of living moves faster.

Investment Strategies That Have Historically Kept Pace With Inflation

No allocation eliminates inflation risk, and nothing here is a prediction of future results. But history offers some reasonable guidance about which parts of a portfolio have tended to hold their purchasing power over long periods.

• Equities, held with a long enough time horizon. Companies can raise prices, which means earnings have historically grown alongside costs over extended periods. That has come with real volatility along the way, so the amount of equity exposure has to match your risk tolerance and your withdrawal needs.
• Dividend-paying companies with a record of increasing payouts. A rising income stream can help offset rising costs, though dividends are not guaranteed and can be reduced or eliminated.
• Real assets. Real estate exposure, infrastructure, and certain commodity-linked holdings have sometimes responded differently to inflation than traditional bonds. They also carry their own risks, including illiquidity and price swings, and they are not appropriate for everyone.
• Shorter-duration fixed income. Longer-maturity bonds are generally more sensitive to rising interest rates. Shortening duration is one way some investors reduce that sensitivity, usually at the cost of some yield.

There is a quieter risk worth naming here, too. Holding an unusually large cash position feels safe, and for near-term spending needs it can be exactly right. Over a twenty- or thirty-year retirement, though, money that earns less than the rate of inflation loses purchasing power every year. Being too conservative is its own kind of exposure.

Where Treasury I Bonds and TIPS Fit in a Retirement Portfolio

Two Treasury instruments are designed specifically around inflation, and both come up often in our conversations.

Treasury Inflation-Protected Securities (TIPS)

With TIPS, the principal value adjusts with the Consumer Price Index, and interest is paid on that adjusted principal. If inflation runs higher than expected, the adjustment works in your favor.

Two practical notes. TIPS can still lose value if sold before maturity when real interest rates rise. And the annual principal adjustment is generally taxable at the federal level in the year it occurs, even though you do not receive that money until maturity. That is one reason TIPS are often held inside tax-deferred accounts rather than taxable ones. Your tax advisor can tell you what makes sense in your situation.

Series I Savings Bonds

I bonds combine a fixed rate that stays with the bond for life with an inflation component that resets every six months. Bonds issued from May 2026 through October 2026 carry a composite rate of 4.26%, made up of a 0.90% fixed rate and an inflation component based on CPI-U. Rates reset each May 1 and November 1.

The constraints matter as much as the rate. Purchase amounts are limited each calendar year, the bonds cannot be redeemed at all for twelve months, and cashing out before five years forfeits the last three months of interest. Interest is exempt from state and local income tax but subject to federal income tax.

Neither instrument is a retirement income plan on its own. Where they tend to be useful is as a targeted piece of a broader strategy, often as part of the reserve you would draw on in a difficult market. If you want to see how a reserve like that fits into your overall income picture, our retirement paycheck guide walks through how the pieces can work together.

Lifestyle Adjustments That Protect Quality of Life

Not every response to inflation happens inside a portfolio. Some of the most effective adjustments we see are ordinary decisions made a little earlier and a little more deliberately.

• Build flexibility into withdrawals. Plans that separate essential expenses from discretionary ones give you somewhere to adjust when costs rise, without disrupting the things that matter most.
• Watch the fixed costs that quietly climb. Property taxes, homeowners and auto insurance premiums, HOA dues, and utilities have moved meaningfully in many Colorado communities. These are rarely reviewed, and small annual increases compound.
• Revisit healthcare coverage every year. Plan designs, drug formularies, and premiums change annually. The Medicare Annual Enrollment Period each fall is a natural checkpoint.
• Time large purchases with the plan in mind. A new roof, a vehicle replacement, or a major trip can often be scheduled in a way that spreads the tax and cash-flow impact rather than concentrating it.
• Protect the experiences, trim the leaks. The goal is not to spend less on the things you retired for. It is to find the spending that has drifted without adding much, so the meaningful parts stay intact.

How We Help Clients Build Inflation Protection Into a Plan

Inflation planning at McGregor Wealth Management is less about a single product and more about how the pieces are coordinated. In practice, that usually involves a few things:

• Stress-testing your income plan against higher inflation assumptions, not just average ones, to see where the pressure would actually appear.
• Reviewing which expenses are fixed, which adjust automatically, and which are fully exposed to rising prices.
• Building withdrawal sequences that consider taxes, Required Minimum Distributions, and Medicare income thresholds together rather than one at a time.
• Coordinating long-term care considerations, since care costs have historically risen faster than general inflation.
• Revisiting all of it on a regular schedule, because inflation assumptions made three years ago may not fit today.

The point is not to predict the inflation rate. It is to build a plan with enough flexibility that you do not need to.

Final Thoughts

Rising costs are one of the few retirement risks that show up every single year, in small amounts, without announcing themselves. That is exactly what makes them easy to underestimate.

A plan built with inflation in mind will not remove the risk. What it can do is give you room to absorb higher costs without changing the life you planned for. That usually starts with an honest look at how your income, investments, taxes, and healthcare costs are working together right now.

If you would like a second look at how inflation could affect your plan, you can request a complimentary consultation or read more retirement planning insights on our blog.

If you’d like to get in touch, call 303.681.0113, email mark@mgswealth.com, or schedule a meeting online.

Frequently Asked Questions

How does inflation affect retirement income?

Inflation reduces what a fixed amount of income can buy over time. Some retirement income adjusts for rising prices, such as Social Security’s annual cost-of-living adjustment, while pensions, fixed annuity payments, and cash savings often do not. Because cost-of-living adjustments are based on past price data, they also tend to arrive after costs have already risen. Retirees may also feel inflation more sharply than the headline number suggests, since healthcare, housing, and insurance make up a larger share of many retirement budgets. Reviewing how each income source responds to rising costs is part of the planning work we do at McGregor Wealth Management.

Do TIPS and I bonds protect retirees from inflation?

TIPS and Series I savings bonds are designed to respond to changes in the Consumer Price Index, which can help a portion of a portfolio keep pace with rising prices. They are not a complete solution. TIPS can decline in value if sold before maturity, and their annual principal adjustments are generally taxable in the year they occur. I bonds have annual purchase limits, cannot be redeemed for the first twelve months, and forfeit three months of interest if cashed before five years. Whether either belongs in your plan depends on your time horizon, tax situation, and how the rest of your portfolio is built.

How often should retirees review their plan for rising costs?

An annual review is a reasonable baseline, with additional check-ins when something meaningful changes, such as a large expense, a shift in health, a move, or a change in tax law. Fall is a practical time for many retirees because Medicare plan changes, year-end tax planning, and the following year’s cost-of-living adjustment all come into focus around the same time. Regular reviews make it easier to adjust gradually rather than reacting after costs have already moved.

About Mark

You probably have people helping with your investments, legal matters, and taxes…but who makes sure you are getting all the benefits you’re owed? I do. My name is Mark McGregor. I scour federal, state, local, and corporate databases to find benefits you are owed but NOT receiving. That’s what I do. Yes, we do all the other things as well, such as providing investment management, tax planning, long-term care planning and other services. Those are the big things, but I also help to make sure the little unknown things are taken care of for you. It’s also making sure that the little things don’t become big problems for you down the road.

I got into this business to fill a void I noticed after the passing of one of my friends’ parents who was experiencing hardship due to poor planning. I saw the issues they had to deal with firsthand, and this left me feeling that there were lots of financial salespeople, but not many true advisors making sure people were getting all the available benefits they had worked so hard for.

I use the skills I gained from my bachelor’s degree from California Polytechnic State University and 24 years of industry experience to get all the benefits my clients are owed. I live in Castle Rock, and we are actively involved in sports and charitable organizations, such as Unbound, which provides personal attention and direct benefits to children, youth, the aging, and their families so they may live with dignity and achieve their desired potential and participate fully in society.

Disclaimer: Investment advisory services are offered through Retirement Wealth Advisors, Inc., an SEC-registered investment adviser. McGregor Wealth Management and Retirement Wealth Advisors are not affiliated. Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss during periods of declining values. Past performance does not guarantee future results. This material is provided for general informational and educational purposes and is not intended as individualized investment, tax or legal advice. McGregor Wealth Management and its affiliates do not provide legal or tax advice. Consult an appropriate financial professional, tax advisor or attorney regarding your individual circumstances. Insurance and annuity guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Mark McGregor and/or McGregor Wealth Management are not affiliated with or endorsed by the Social Security Administration or any other government agency.