Actionable Strategies to Protect Your Income

You cannot control the inflation rate or the official government formula, but you can control how you structure your retirement income. Taking proactive steps today ensures that inflation does not derail your long-term security.

• Optimize Your Claiming Strategy: If you have not yet claimed Social Security, strongly consider delaying your benefits. Every year you wait past your full retirement age until age 70 increases your base benefit by 8 percent. Because the annual COLA is a percentage multiplier, applying that percentage to a larger base benefit yields significantly more total dollars over your lifetime.
• Re-shop Your Medicare Coverage: Medicare Advantage and Part D prescription drug plans change their formularies and pricing every single year. Use the Medicare Open Enrollment period (October 15 through December 7) to compare plans on Medicare.gov. Switching to a plan that covers your specific medications at a lower cost can save you hundreds of dollars, effectively putting the COLA back in your pocket.
• Implement Tax Diversification: Build buckets of money with different tax treatments. Keep funds in taxable brokerage accounts, tax-deferred accounts (Traditional IRAs), and tax-free accounts (Roth IRAs). When inflation spikes and you need extra cash, pulling from a Roth IRA prevents you from increasing your provisional income and triggering the Social Security tax torpedo.
• Audit Your Discretionary Spending: Track your actual expenses over a three-month period. Separate your essential bills (housing, food, healthcare, utilities) from your discretionary spending (travel, dining out, hobbies). When inflation drives up your essential costs, knowing exactly where to temporarily trim discretionary spending provides immediate financial relief.
• Build a Robust Cash Buffer: Maintain one to two years of living expenses in a high-yield savings account or short-term Treasury bills. This cash buffer ensures you do not have to sell stocks at a loss during a market downturn just to keep up with rising daily living costs.