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How to protect your retirement portfolio from inflation

Inflation is a real cause for concern if you are close to retiring, but there are strategies to help protect your retirement savings.

Plan for healthcare costs in retirement

Some expenses go down in retirement — after all, you won't be commuting to the office, buying work-related attire, or paying Social Security and Medicare taxes. Unfortunately, health care costs tend to increase, becoming one of your largest budget items in retirement.7

Fortunately, it's possible to set aside money for retirement health care spending with a Health Savings Account (HSA).

HSAs are excellent options for saving for retirement because they come with a triple tax benefit:8

  1. Contributions are made on a pre-tax basis, meaning they reduce your taxable income today.

  2. Investments can grow tax-free.

  3. Withdrawals are also tax-exempt as long as they're used to pay for qualified health care expenses.

In 2022, you can contribute $3,650 to a self-only HSA or $7,300 for a family plan.9

There are a few things worth noting about this strategy. First, you have to have a high-deductible health care plan (HDHCP) to open an HSA. Second, you cannot contribute to an HSA once you enroll in Medicare.10

Finally, if you currently have a lot of out-of-pocket medical costs, you could spend all of your HSA funds on medical expenses that aren't covered by insurance.

But if you already have an HDHCP at work, have several years until retirement, and don't have a lot of out-of-pocket medical expenses, an HSA can be another way to save for retirement. Just look for a low or nofee HSA that allows you to invest your balance rather than just paying a paltry rate of interest. To maximize the amount you have available when you retire, contribute the maximum each year and invest whatever you don't spend.

Inflation is a real cause for concern for anyone looking forward to retirement. Fortunately, like market fluctuations, it's something you can plan for. The first step is to discuss your plans with your Synovus financial advisor. They can help ensure you're responding to inflation in a way that makes the most sense for your unique circumstances.

Important disclosure information

This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.

  1. Bureau of Labor Statistics, “Consumer Price Index — October 2021," published November 10, 2021, accessed December 7, 2021. Back
  2. TreasuryDirect, “Treasury Inflation-Protected Securities (TIPS)," updated September 27, 2013, accessed December 7, 2021. Back
  3. Brian O'Connell and John Schmidt, "Treasury Inflation Protected Securities (TIPS)," Forbes Advisor, updated April 13, 2021, accessed January 3, 2022. Back
  4. Anna-Louise Jackson, “U.S. Rate of Inflation Hits a 31-Year High. So We Asked Financial Pros How to Invest in Periods of High Inflation," MarketWatch, updated November 12, 2021, accessed December 7, 2021. Back
  5. Social Security Administration, “Retirement Benefits," accessed January 6, 2022. Back
  6. Michelle Singletary, “The 'Great Resignation' Is Leaving Many Americans Wondering: Should I Pay Off My Mortgage Early?" Washington Post, published October 26, 2021, accessed December 7, 2021. Back
  7. Eshani Haque, “The 3 Biggest Expenses You Need to Save for in Retirement," Yahoo, published July 29, 2019, accessed December 7, 2021. Back
  8. IRS, “Health Savings Accounts and Other Tax-Favored Health Plans," updated February 11, 2021, accessed December 7, 2021. Back
  9. SHRM, “IRS Announces 2022 Limits for HSAs and High-Deductible Health Plans," published May 10, 2021, accessed December 7, 2021. Back
  10. Medicare Interactive, "Health Savings Accounts (HSAs) and Medicare," accessed January 3, 2022. Back