How to Make Your Money Last in a Longer, More Expensive Retirement
For retirees — or anyone getting close — one of the biggest goals is making sure your savings last as long as you do. That’s become a tougher challenge lately. Inflation has pushed up the cost of just about everything, and prices for essentials like healthcare, housing, and groceries remain high.
Even though stocks and bonds can help keep up with inflation, not everyone feels comfortable taking on market risk. Others simply wonder if their savings will stretch far enough. Understanding how inflation affects retirement income and how to build a portfolio that keeps your purchasing power intact is key.
Social Security Adjustments Don’t Always Keep Up
The Social Security Administration recently announced a 2.8% cost-of-living adjustment (COLA) for 2026. That brings the average monthly benefit to about $2,064 — just $56 more per month. While any increase helps, it’s small compared to the 8.7% jump in 2023, which was the biggest in decades.
Here’s the issue—prices may stop rising as quickly, but they rarely go down.
Plus, the COLA is based on an index that tracks costs for working households, not retirees — and older adults often face higher inflation because they spend more on healthcare, insurance, and housing.
Just in the past year:
Medical services are up 3.9%
Health insurance rose 4.2%
Home insurance climbed 7.5%
Food prices increased 3.1%, with meat and fish up 6%
And don’t forget about Medicare: Part B premiums could rise $21.50 per month in 2026. For many retirees, that increase alone will eat up nearly 40% of their COLA, leaving even less money to cover rising living costs.
Longer Lives Mean Longer Retirements
People are living longer than ever — and that’s a good thing! But it also means your money has to last longer.
A 65-year-old man today can expect to live to 83, and a woman to 86. Many will live well into their 90s. That extra decade or more of life can make a big difference in how you plan, save, and spend.
This is what’s known as “longevity risk” — the risk of outliving your money. Running out of funds in retirement is a far bigger problem than leaving some behind.
That’s why it’s so important to include growth investments like stocks in your plan, even in retirement. While bonds can provide steady income, stocks help your portfolio grow enough to outpace inflation over time. A thoughtful, well-balanced plan that combines income and growth — and adjusts as your needs change — is essential.
Lower Interest Rates Mean Less Income from Cash
As inflation cools and the job market slows, the Federal Reserve is expected to keep lowering interest rates. That’s generally good for the economy — but it also means cash and money market accounts will pay less interest.
If you’ve been relying on cash income the past couple of years, this shift might sting. Holding some cash for short-term needs is smart, but too much cash can actually hurt your long-term financial picture because inflation quietly eats away at its value.
The takeaway? A mix of stocks, bonds, and a bit of cash helps balance growth, income, and safety — even when rates are changing.
Inflation may be easing, but prices remain high, and cost-of-living increases from Social Security only go so far. Combine that with longer life expectancies and falling interest rates, and it’s clear: retirees need portfolios that can deliver both income and growth over time.
A 5-Year Income Plan that we use is designed to create a stable, tax-efficient income stream that supports your lifestyle in the early years of retirement while also planning for growth in the long-term.
Smart planning — with a strategy like this — helps you maintain the freedom to live the way you want while keeping your long-term investments on track for the future.
Process over predictions.
Shean