John Mickelson is a Logan, Utah-based wealth manager and the founding partner of Wealth Advocates, where he has guided retirees and small business owners since the mid-1990s. With more than three decades of experience in retirement, business, and estate planning, John Mickelson coordinates investment and insurance strategies designed to preserve purchasing power and support long-term financial independence. He holds advanced professional designations, including Chartered Financial Consultant and Advanced Estate Planner, and has maintained long-standing recognition as a Million Dollar Round Table life member. His background in international finance from Brigham Young University, combined with graduate studies in financial services at The American College, informs his approach to addressing inflation risk, income sustainability, and portfolio structure. Through his work at Wealth Advocates, John Mickelson focuses on aligning retirement plans with economic realities, helping clients understand how inflation affects long-term expenses and how diversified strategies can support stability throughout retirement.
Creating a Retirement Plan That Hedges Against Inflation
Beyond putting money aside every month, retirement planning requires you to make sure your savings and investments actually grow enough to support you for decades, even after you have stopped working. Inflation is a big threat to retirement income because it erodes the purchasing power of your money, making utilities, basic healthcare, and groceries expensive. If you do not account for inflation in your retirement planning, you might end up losing a significant amount of your retirement income. There are strategies that you can adopt to hedge your income from inflation.
Inflation is the steady increase in the price of goods and services over a given period. It makes retirees particularly vulnerable as their retirement income, such as savings and pensions, is always fixed. Additionally, failing to plan your retirement properly may lead to rising costs, reducing your ability to cover key expenses. So, your retirement portfolio has to generate returns that consistently outpace inflation.
First, you should establish a realistic and objective retirement budget and goal. Your budget should include essential expenses like housing, healthcare, transportation, and food. You should also make room for discretionary expenses, such as hobbies, travel, and recreation. You should then project or measure the likely inflationary costs of these activities. For example, healthcare costs tend to increase by five to seven percent annually, which is faster than the overall inflation rate. Anticipating these increases will help you to develop a more accurate expectation of your future needs. So, you should always make room for a three to four percent increase in annual inflation when doing your retirement calculation.
If you want your retirement savings to outpace inflation, you need to focus on growth-oriented investments rather than keeping your money in low-interest savings accounts. Stocks and equity mutual funds have historically provided long-term average annual returns of seven to ten percent, well above inflation. Real estate can also play a key role since property values and rental income tend to rise with inflation. If you prefer a more conservative approach, Treasury Inflation-Protected Securities adjust with inflation and guarantee real returns. Commodities and precious metals like gold and silver may also increase in value when inflation is high, though they can be more volatile.
Relying on only one income stream in retirement can put you at risk, so it is better to build a mix of income sources that grow or adjust with inflation. You can delay Social Security benefits until full retirement age or later to increase your monthly payments. Dividend-paying stocks from companies with a record of raising payouts can also help your income keep pace with rising costs. Annuities that include inflation riders offer another way to protect your purchasing power.
You also need to keep an eye on taxes and expenses, since they can quietly reduce your retirement income over time. Using tax-advantaged accounts like IRAs and 401(k)s helps you defer or reduce taxes, and converting some savings into a Roth IRA gives you the benefit of tax-free withdrawals later. Choosing low-cost index funds or ETFs helps you avoid high investment fees, while regularly reviewing and rebalancing your portfolio keeps it aligned with your goals. By managing both income and expenses, you strengthen your ability to stay ahead of inflation and maintain financial security throughout retirement.
About John Mickelson
John Mickelson is a Chartered Financial Consultant and Advanced Estate Planner based in Logan, Utah, and the founding partner of Wealth Advocates. With more than 30 years of experience, he advises retirees and business owners on coordinated retirement, investment, and estate planning strategies. A graduate of Brigham Young University with advanced financial services education from The American College, he has earned long-standing professional recognition for his work in financial planning and client service.
