Until recently, you probably  didn’t spend much time thinking about inflation. But now gas, groceries, and utilities are all on the rise. Everyone is wondering how high it will go? If you’re in retirement, you may be worried about how inflation will affect your nest egg, and that’s a valid concern. If you have $1,000,000 to live on in your retirement account. And your original plan accounts for you to spend $50,000 per year with 3% annual inflation and a 3% rate of return, your savings will last you 20 years. But what if inflation skyrockets to 12% per year? How long will your money last under those conditions? The answer is 11 years and nine months. (1) So, how do you help protect yourself against inflation?

If you listened to America’s Wealth Management Show a few weeks ago, you heard Dean Barber and I talk about real estate and owning REITs. Many people like the daily liquidity of the publicly traded real estate investment trusts along with the variety of publicly traded real estate investment trusts. Through shopping centers, hospitals, doctors’ buildings, bank buildings, and restaurants, it’s possible to earn income and potential appreciation over time. Admittedly, I’ve seen those real estate investment trusts do well, and I’ve seen them struggle from time to time. REITs are not all created equal. However, they may be a smart addition to a portfolio as long as they’re structured properly.

What about purchasing a property? Some people get nervous about buying an additional or a different home when prices go up, but sometimes, it can be incredibly beneficial. A few years back, my wife and I took a trip to Florida. We started looking at properties out of curiosity, and we quickly discovered a few opportunities. Before we knew it, we put a bid on a home. Then COVID hit. So, we backed out. The owner then decided to lower the house price because he, like many people, had fallen into a mode of fear. It worked out in our favor, though, and we ended up purchasing the property. I decided I could always sell it if I didn’t like it. However, since the closing date, the value of that home has doubled, so it was a good investment. But at the same time, the value increase of the house doesn’t get me super-excited because I’m not selling or living off it. What gets me excited is the value that it has brought to our life. My family creates memories in this home that will live on past my and my wife’s lifetime.

Getting back on the topic regarding how to fight inflation with real estate, I’ve more than doubled my equity in that home if we look at my down payment. Here’s another example of how real estate can be an excellent investment. Let’s say someone is purchasing a $500,000 property. They put $100,000 down, so they invested $100,000 of capital. Interest rates are low, and if they borrowed $400,000 to add with their $100,000, they have $500,000 to purchase the home. But if that $500,000 house appreciates over time to $700,000, they’ve tripled the cash they put into the home. At that point, if they sell the house, even with an interest-only loan, they will have $300,000 of money when they sell. That’s tripling their initial $100,000 investment. In that situation, leverage on real estate when interest rates are low can compound that appreciation in a way that can be significant.

Real estate can be used as a future tax reduction strategy to help fight inflation. If someone is considering a real estate purchase, and the payment is $1000 a month. That person could take  $1000 a month out of their 401(k) or IRA. Depending on your tax situation, because it doesn’t work for everybody, you might be able to write off that interest against the income tax that you will pay on the withdrawal out of the 401(k) or IRA. That’s another way to move money on a tax-favored way out of your IRA and pay for a real estate purchase.

Is your current retirement plan able to withstand the stress of current inflation rates? At Osiwala Financial Group, we use our Guided Retirement System to stress-test retirement plans to help our clients and prospective clients discover if inflation could derail their future. But what if you don’t have a plan at all? Don’t be someone who is heading into retirement or who is already retired and, due to inflation, you discover you can’t do the things you wanted to do because living expenses are through the roof. Unfortunately, these are the people that I have seen most upset because they can’t go on vacation or visit their grandkids because they don’t have a properly designed retirement plan. Gain clarity and confidence in retirement by calling us and asking for a complimentary consultation. After going through that process, you’ll know if your retirement plan is appropriately structured to fend off inflationary pressures, higher interest rates, or market volatility. We can do that consultation by phone, in-office, or virtually. To make that appointment, click HERE.

Want to learn more ways to fight inflation in retirement? Make sure to listen to America’s Wealth Management Show by clicking HERE to learn other strategies that pre-retirees and retirees have used to protect their wealth. 


  1. https://www.forbes.com/advisor/retirement/inflation-retirement-investments/