If you’re retired, or planning to be soon, you probably share one big goal: making sure your money lasts as long as you do. But that’s getting tougher.
Prices are still high. Groceries, gas, insurance, travel all costs more than it used to. Inflation may have cooled off, but it didn’t reverse. The prices that shot up during the pandemic didn’t come back down, and that continues to chip away at the purchasing power of your savings.
That means even if your investments look good on paper, the real question is: will your income keep up with the rising cost of living?
Let’s break down what’s really going on and what you can do about it.
The Social Security Administration just announced a 2.8% cost-of-living adjustment (COLA) for 2026. That bumps the average monthly benefit to about $2,064 or an average increase of only $56.
Sounds nice, but here’s the problem: retirees don’t spend like the average worker, and that’s who the COLA is based on. The formula (called the CPI-W) tracks prices for working households, not retirees. And retirees face a different set of inflation pressures.
Healthcare costs rose almost 4% over the past year. Health insurance jumped 4.2%. Home insurance climbed 7.5%. Even eating out costs about 4% more.
Now add this; Medicare Part B premiums are projected to rise $21.50 a month in 2026. Since that’s usually deducted from your Social Security check, that increase alone eats up nearly 40% of your COLA.
In other words, the “raise” you were counting on might disappear before it even hits your account.
Here’s the good news: people are living longer. The average 65-year-old man today is expected to live to 83, and the average woman to 86. But that’s just the middle of the pack. Many will live well into their 90s.
The challenge? A 30-year retirement costs a lot more than a 20-year one. And when your money needs to stretch across three decades, it has to grow.
That’s why being too conservative can backfire. Bonds and cash are important for stability and income, but over time, they don’t keep up with inflation. Stocks, while more volatile, have historically been the best long-term defense against rising prices.
So the real risk isn’t just market swings, it’s losing purchasing power. A balanced portfolio that combines income, growth, and flexibility is what helps retirees stay ahead.
This is called longevity risk: the risk of outliving your money. It’s not symmetrical. If you underspend, your heirs benefit. But if you overspend or invest too cautiously, you could come up short. And that’s a problem you can’t easily fix later.
For the last couple of years, retirees have enjoyed something rare: solid yields on cash. Money market accounts were paying 4–5%, and that felt great after a decade of earning next to nothing.
But those days are fading. With inflation easing and the economy cooling, the Federal Reserve is expected to keep cutting rates. That means the return on cash will drop. And because inflation still runs higher than most bank yields, cash is quietly losing value again.
Holding some cash for short-term spending and emergencies makes sense. But holding too much can be a slow leak on your wealth, which is akin to going broke safely.
Planning for retirement isn’t just about protecting what you’ve built. It’s also about preserving what your money can buy.
Prices won’t go backward. Social Security adjustments help, but they won’t cover the full gap. Interest rates will rise and fall. But the only thing that stays consistent is the need for a thoughtful, flexible plan.
The best approach blends income, growth, and discipline. It keeps you invested enough to outpace inflation but liquid enough to weather downturns. And it adapts as life unfolds, because markets, inflation, and longevity are all moving targets.
At the end of the day, the goal isn’t just to make it through retirement. It’s to live well through it. To have the freedom to travel, help your kids, or simply enjoy a quiet morning without worrying about the next Fed meeting.
That’s what real financial independence looks like. It’s not about chasing high returns or timing the market. It’s about confidence; the kind that comes from knowing your money will do what you need it to do, for as long as you need it to.