How to Protect Yourself Against Inflation

If there’s one thing that scares me about my money situation, it’s inflation.

In one of my most popular posts where I broke down how much money you need to never work again, I barely mentioned inflation. That’s because when I wrote it just a couple of years ago, inflation wasn’t a huge deal. Things can change quickly.

For most of my lifetime, inflation was a slow, steady process. Every year prices would rise about 1–2% on average. This meant that a yearly 3% raise at work kept you out ahead. It also meant that retirement planning was pretty easy; If you expected your investment to earn 8% per year and inflation to be 2%, you could just run your calculations as if you were going to be earning 6% on your investments. Not a huge deal.

The Destructive Power of Inflation

Everything changes completely when the inflation rate jumps up to something in the range of 6–8% like it has been since the middle of 2021 (when they said inflation would be temporary). Now the math goes: You expect your investment to return 8% per year but you need to discount that 6–8% for inflation. Good luck with that.

And of course, where most people really feel inflation isn’t when planning for financial independence, it’s when they are living their everyday lives. You notice it…