​One of your biggest financial challenges in retirement may be something that’s not on your radar. It’s inflation, which is the gradual increase in the price of goods and services from year to year. Inflation is easy to ignore because the cost isn’t immediately obvious. However, inflation can be corrosive over time. If you don’t have a plan to keep up with inflation, you could struggle to support your lifestyle, especially in the later years of retirement.
 
While inflation rates may fluctuate, inflation itself is a natural occurrence. A modest level of inflation can even be a sign of economic growth. However, inflation can have a big impact over the long term. Consider the impact of even a modest inflation rate. An average annual inflation rate of 3 percent would double your cost of living over a 24-year retirement.
 
Social Security tries to help retirees combat inflation with something known as a cost-of-living adjustment (COLA). Benefits are increased annually based on the overall inflation rate. COLA isn’t always sufficient, though. For example, in 2017 and 2018, COLA was set to 2 percent. In 2016 it was 0.3 percent, and in 2015 there was no COLA.1

​Are you planning your retirement? If so, you’re likely analyzing your projected income to determine whether it will meet your needs. It’s likely that Social Security will be a part of your retirement income mix. Nearly 90 percent of all retirees rely on Social Security benefits for a portion of their income.1
 
Your Social Security benefit amount is based on a number of factors. One of the most important factors is the age at which you file for benefits. You can file for benefits as early as age 62 or as late as age 70. Generally, the older you are when you file, the larger your payment will be.
 
Another important factor is your earnings history. Social Security uses an average of your 35 highest-earning years as a basis for your benefit amount. That could be problematic if you have limited or low-earning work history.