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    Causes of inflation in retirement

    March 13, 2026

    Do you remember when inflation hit its 40-year high of 9.1% in July 2022?1 We’re all thankful it’s retreated since then, but it’s still part of life and so are its implications on your retirement income.

    So, what are the causes of inflation, the result and what approach could you take to protect your retirement savings?

    In this article, you’ll learn:

    Is inflation worse for retirees?

    Inflation falls especially hard on retirees because, in addition to raising the cost of the things they buy today, it also reduces the value or purchasing power of dollars they may not spend for many years.

    If you haven't planned for the effects of inflation, or haven't anticipated how high inflation could go, you may be forced to make painful changes in retirement.

     

    What are the top causes of inflation in retirement that could threaten to erode your savings?

    The reality is that prices go up over the years for a variety of reasons. . .

    Demand

    Often, increased demand is a primary culprit for raising prices, just as a bevy of bidders at an auction will bid up the price of a limited item. This is one of the most familiar causes of inflation. Essential items such as food, clothing, shelter and utilities are highly susceptible to demand because they’re necessities that people can’t do without. So, sellers and providers know they can raise the price and pocket the increased profit.

    Raw material costs

    From a manufacturing point of view, price highs are passed down directly to consumers like you. Factors such as war, labor strikes or government regulation make raw materials more costly, which in turn finds its way into consumer prices.

    Labor costs

    The cost of labor might go up because of renegotiated union contracts, revised government regulations or increasing competition for workers. Rising wages affect inflation in another way as well. When workers have more money, they spend more, bidding up the prices of consumer goods and services. And let’s not forget supply-chain disruptions, such as the ones that kept ships from delivering raw materials and components during the pandemic.

    Monetary policy

    Similarly, when our government or business institutions increase the supply of money in the economy, more spending and investment follow like clockwork. When our leaders anticipate inflation, the steps they take to mitigate its impact can actually create or exacerbate the situation.

    For example, when the government increases social transfer payments to help people afford rising prices, they increase the money supply, which can further drive up prices. Too large an increase in the money supply can directly lead to increased inflation.

    What are some ways to protect yourself from the effects of inflation?

    Fortunately, you’re not forced to stand by and watch the effects of inflation reduce your financial stability before or during retirement. There are ways you can fight back. Here are several to consider as you plan for and enter retirement:

    1. Tighten your belt. We’re putting the most painful one upfront. During periods of rising inflation, either before or during retirement, you may want to reduce your discretionary spending. Anything you do to decrease your spending lowers the amount of money you have to take from retirement savings. And the less you withdraw, the more is left to generate interest and returns.
    2. Create an emergency fund. As previously discussed, your expenses are likely to increase in periods of higher inflation. Rather than be forced to remove assets from your retirement portfolio that might still compound and grow tax deferred,* create an emergency fund to cover unexpected expenses.
    3. Postpone Social Security to maximize your benefits. If you were planning to take Social Security at 62 or shortly thereafter, consider holding off until you reach, or get closer to age 70. In fact, according to the Social Security Administration, “taking retirement benefits as early as 62 or as late as 70 can mean the difference between $750 and $1,320 a month.”2
    4. Consider an annuity as part of your retirement plan to address inflation. Be sure to work with a financial professional to put that plan into place.

    Building wealth and guarding it from the effects of inflation can be a challenge. But with proper planning, it may be possible.

    Annuities may provide the kind of guaranteed† income designed to reduce inflation risk. They can also be especially helpful when other income sources become uncertain. Annuity products can help bridge the gap between the savings you’ve accumulated over time and traditional sources of retirement income, like Social Security or a 401(k). Plus, if you don’t need the income immediately, you can let it potentially grow tax deferred.

    As always, talk with your financial professional about the investment options that might work best in your situation.

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    *Tax deferral offers no additional value if an annuity is used to fund a qualified plan, such as a 401(k) or IRA, and may be found at a lower cost in other investment products. It also may not be available if the annuity is owned by a legal entity such as a corporation or certain types of trusts.

    †Guarantees are backed by the claims-paying ability of Jackson National Life Insurance Company or Jackson National Life Insurance Company of New York.

    1. PBS News Hour, “U.S. inflation at 9.1 percent, a record high,” July 13, 2022.

    2. Social Security Administration, "Retirement Ready Fact Sheet For Workers Ages 61-69," accessed January 9, 2026.

    Annuities are long-term, tax-deferred vehicles designed for retirement and are insurance contracts. Variable annuities and registered index-linked annuities involve investment risks and may lose value. Earnings are taxable as ordinary income when distributed. Individuals may be subject to a 10% additional tax for withdrawals before age 59½ unless an exception to the tax is met. Add-on living benefits are available for an extra charge in addition to the ongoing fees and expenses of the variable annuity and may be subject to conditions and limitations. There is no guarantee that a variable annuity with an add-on living benefit will provide sufficient supplemental retirement income.

    Before investing, investors should carefully consider the investment objectives, risks, charges, and expenses of the variable annuity and its underlying investment options. The current contract prospectus and underlying fund prospectuses provide this and other important information. Please contact your financial professional or the Company to obtain the prospectuses. Please read the prospectuses carefully before investing or sending money.

    Jackson, its distributors, and their respective representatives do not provide tax, accounting, or legal advice. Any tax statements contained herein were not intended or written to be used and cannot be used for the purpose of avoiding U.S. federal, state, or local tax penalties. Tax laws are complicated and subject to change. Tax results may depend on each taxpayer’s individual set of facts and circumstances. Clients should rely on their own independent advisors as to any tax, accounting, or legal statements made herein.

    Guarantees are backed by the claims-paying ability of Jackson National Life Insurance Company or Jackson National Life Insurance Company of New York. For variable annuities, guarantees do not apply to the principal amount or investment performance of a variable annuity’s separate account or its underlying investments. They are not backed by the broker/dealer from which this annuity contract is purchased, by the insurance agency from which this annuity contract is purchased or any affiliates of those entities, and none makes any representations or guarantees regarding the claims-paying ability of Jackson National Life Insurance Company or Jackson National Life Insurance Company of New York.

    The latest maturity date or income date allowed under an annuity contract is age 95, which is the required age to annuitize or take a lump sum. Please see the prospectus for important information regarding the annuitization of a variable annuity contract.

    Annuities are issued by Jackson National Life Insurance Company (Home Office: Lansing, Michigan) and in New York, by Jackson National Life Insurance Company of New York (Home Office: Purchase, New York).  Annuities are distributed by Jackson National Life Distributors LLC, member FINRA. These contracts have limitations and restrictions. Jackson issues other annuities with similar features, benefits, limitations, and charges. Contact Jackson for more information.

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