Inflation and Retirement

Understand inflation’s recent rise, which assets thrive, and why diversifying with commodities like gold and copper matters for retirement. Try our calculator!

7/24/20254 min read

gold and silver round coins
gold and silver round coins
Protect Your Savings from Rising Prices

Has your financial advisor made you aware of the rising inflation reading from June? If not, it’s time to take a closer look. Inflation can quietly erode your retirement savings, making it harder to enjoy the life you’ve planned, whether that’s traveling, spending time with family, or pursuing new passions. Understanding how inflation is trending, which assets can help protect your wealth, and why spreading your investments across stocks and commodities matters is key to securing your future. Let’s break down June’s inflation spike in simple terms, explore asset classes that often thrive when prices rise, and see how diversification can keep your essentials covered while your portfolio grows. With the right plan, you can stay ahead of inflation and focus on the retirement you envision.

Understanding June’s Inflation Spike in Plain Terms

Inflation is when the price of things you buy like a gallon of milk or a doctor’s visit goes up over time. It means your savings buy less than they used to, so a $100 grocery bill today could cost $104 next year. The Consumer Price Index (CPI) measures these price changes for a typical “basket” of goods and services. When inflation rises, your retirement income needs to stretch further to cover essentials like housing or utilities. In June, the CPI rose by 0.3% month-over-month, pushing the annual inflation rate to about 3.6%, according to recent reports. This increase, driven by higher energy costs (e.g., gas prices up 2%) and food prices (e.g., groceries up 1.5%), reflects supply chain pressures and new economic policies, like proposed tariffs. For pre-retirees, this means costs like healthcare or rent could take a bigger bite out of your budget, challenging fixed incomes or savings.

Asset Classes That Thrive in Rising Inflation

When inflation picks up, some assets lose value, while others tend to shine, helping you preserve your purchasing power. Here’s a look at key asset classes that often perform well during inflationary times:

  • Commodities: These raw materials, like metals or energy, often rise in price with inflation, as they’re tied to real-world demand. Adding them to your portfolio can diversify your investments beyond stocks, acting as a buffer against rising costs.

    • Gold: A classic inflation hedge, gold’s price jumped 4.6% in June, hitting around $2,800 per ounce, fueled by economic uncertainty and central bank purchases.

    • Silver: Used in industry and as a store of value, silver rose 8% in the past month, driven by demand for solar panels and electronics.

    • Copper: Essential for construction and electric vehicles, copper gained 17% in the past, reflecting growth in green energy sectors.

    • Uranium: With nuclear energy demand rising, uranium prices increased 9% in the past month.

    • Palladium: Critical for auto manufacturing, palladium saw a 21% increase the past month, following a 33% rally since December 2024, tied to industry recovery.

    • Steel: Saw a 15% increase over the past month.

  • Real Estate Investment Trusts (REITs): REITs own properties like apartments or retail spaces and can raise rents as inflation climbs, boosting returns. Historically, REITs have delivered 9-20% annual returns in high-inflation periods, supporting both income and growth.

  • Treasury Inflation-Protected Securities (TIPS): These bonds adjust their principal and interest with inflation, ensuring your money keeps pace. They’re low-risk but offer modest yields, ideal for covering essentials.

  • Stocks in Resilient Sectors: Companies in energy or consumer staples (e.g., food producers) often pass higher costs to customers, maintaining profits during inflation. Tech or retail stocks, however, may struggle as spending slows.

These assets don’t guarantee gains, but their track record in inflationary environments makes them valuable pieces of a retirement plan.

The Case for Diversifying Across Stocks and Commodities

You’ve probably seen headlines about the stock market hitting new highs, with the S&P 500 climbing despite inflation concerns. But leaning only on stocks can leave you vulnerable when prices rise. A 1% unexpected inflation spike can cut stock returns by 3%, especially in sectors like tech or retail, where higher costs pinch profits. Commodities, on the other hand, often gain 7% in the same scenario, driven by supply and demand dynamics.

Commodities like gold (+4.6%), silver (+38%), copper (+17%), uranium (+9%), steel (+15%) and palladium (+21%) offer a hedge because their prices often rise with inflation, unlike stocks, which can falter under economic pressure. Yet, commodities can and have fluctuated as well. By diversifying across stocks (growth), REITs, TIPS, and annuities (income), and commodities (for inflation protection), you create a balanced portfolio. This approach helps ensure essential monthly living costs are covered, freeing up other investments to grow for bigger goals, like travel or a family legacy.

Diversification isn’t about chasing the hottest asset; it’s about building resilience. A mix of stocks and commodities lets you weather inflation’s impact, keeping your retirement plan steady through economic shifts.

Plan a Retirement That Outpaces Inflation

June’s 0.3% inflation rise may seem small, but over time, it can shrink your savings’ value, making it tougher to fund healthcare, utilities, or hobbies in retirement. By exploring assets like gold, copper, REITs, TIPS, annuities and diversifying wisely, you can protect your wealth and pursue your dreams with confidence. A balanced plan ensures your essentials are secure while your portfolio grows for the future.

Curious about how your income strategy stacks up against rising costs? Our retirement income calculator lets you map your savings and income sources against expenses. In just a few minutes, you’ll see if your plan can handle inflation’s bite and support the retirement you envision. Try it today, and take control of your financial future!