With inflation prices rising to 8.6% in May of 2022, boomers face several budgeting challenges. Rising inflation can influence when to retire, investment choices, spending habits, and significant purchases.

Reassess Spending Habits

Recent inflation affects nearly all categories of goods and services, which means it’s necessary to reorganize budgets to get the most for every dollar. Budgets can help ensure consumers are attentive to their spending and identify any unnecessary purchases.

Budgets should include set allocations for basic needs such as housing, fuel, food and clothing to keep expenses within income means. Most of the remaining budget should go toward retirement or emergency savings.

If existing income isn’t enough for budget needs, it may be necessary to take on extra work or delay retirement.

Cut Unnecessary Purchases or Try Alternatives

Depending on the budget, some expenses may need to be cut out or replaced with low-cost or free alternatives. For example, home workouts can substitute for a gym membership, and bringing coffee and food from home can reduce expensive food bills.

Many boomers want to go on expensive vacations, but may have to settle for cost-effective options. Domestic travel can be cost-effective, but airlines and other services sometimes offer exceptional travel deals.

Review Your Investments

Although it's tempting to pull funds from retirement savings and investments, these funds are important for hedging against inflation. Boomers should continue to invest, but review their portfolios to ensure they’re keeping up with economic conditions.

Most retirement portfolios estimate a 3% inflation rate when making retirement budget projections, but current inflation rates may necessitate higher estimations.