By JT Belnap | Treasure Valley Financial Planning | 2026 | 6-minute read

You didn’t imagine it. Things really are more expensive.

I know that sounds obvious. But I say it because a lot of people I talk to feel like they should have adjusted by now. Like the frustration they feel at the grocery store or the gas pump is somehow irrational. It isn’t. What you’re feeling is real, and the economics behind it are actually worth understanding, especially if you’re within a few years of retirement.

Here’s the honest picture.

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Inflation came down. Prices didn’t.

For a brief stretch in 2025, headline inflation cooled to around 2.4%. People started to relax a little. The news moved on.

Then 2026 happened.

As of April 2026, the annual inflation rate has jumped back to 3.8%, the highest reading since May 2023, according to the Bureau of Labor Statistics. The primary driver this time is an energy price shock tied to the conflict with Iran, with gasoline prices up nearly 28% year over year. Food prices are climbing again too.

But here’s the thing most of the headlines miss. Even before this latest jump, things hadn’t gotten cheaper. Not really.

That’s the part that trips people up. When inflation cools, prices don’t fall. They just stop rising as fast. A box of cereal that cost $4 before COVID and $6 after COVID is still $6 today. The lower inflation rate just means it might be $6.18 next year instead of $6.50. That’s not relief. That’s a slower version of the same pressure.

Prices falling would be deflation. And while that sounds appealing, it comes with its own serious problems: falling wages, slower growth, less business investment. The Federal Reserve targets roughly 2% inflation specifically because mild inflation is healthier than none. But try explaining that to someone standing at a checkout counter.

Why it feels worse than the numbers suggest

The math alone doesn’t capture it. There’s a psychological dimension here that matters.

For the better part of two decades before COVID, prices crept up slowly enough that most people barely noticed. A dollar here. Fifty cents there. The price of a fast food meal went from $7 to $8 over four years and nobody tracked it closely.

Then in the space of a couple of years, everything lurched higher by dollars, not cents. That kind of jump is jarring. It disrupts the mental anchors we use to evaluate whether something is “worth it.” And once prices reset at a higher level, the anchors shift. But the memory of what things used to cost doesn’t go away immediately. That gap between memory and reality is where the frustration lives.

There’s also the tipping culture shift, the shrinkflation (same price, less product), and the fact that in service industries, companies that raised prices during high inflation have little incentive to bring them back down just because their own input costs have eased. Margins got better. That’s not going to change without competitive pressure.

None of this is conspiracy. It’s just how markets work. But it’s also genuinely difficult for families and individuals trying to make their dollars go as far as they used to.

What this means if you’re approaching retirement

This is where I want to slow down, because for people within five years of retirement, inflation isn’t just an inconvenience. It’s a planning variable that affects everything.

Think about what a 3.8% inflation rate means in practice. If your retirement budget is $8,000 a month today, maintaining that same standard of living will require roughly $11,700 a month in ten years, assuming that inflation rate holds. Twenty years out, it’s closer to $17,100.

That gap has to come from somewhere. Either your portfolio grows fast enough to fund it, your Social Security and any other income sources keep pace, or your lifestyle contracts.

This is exactly why we push our clients toward retirement income planning that accounts for inflation explicitly, not as a footnote but as a core assumption. A plan that works at 2% inflation may not work at 3.8%. And a plan built on today’s spending needs without projecting forward is already outdated.

A few things worth thinking about specifically:

Your fixed expenses are the most vulnerable. Housing costs, insurance premiums, healthcare, property taxes. These tend to rise faster than general inflation and they’re the hardest to cut.

Your investment portfolio needs to outpace inflation, not just grow. A 5% nominal return in a 3.8% inflation environment is really a 1.2% real return. That’s a very different retirement than people often picture when they see a 5% return on their statement.

Social Security has cost-of-living adjustments, but they lag reality. The COLA formula doesn’t always track what retirees actually spend money on. Healthcare inflation, for example, typically runs well above the headline CPI number.

Cash and short-term savings lose purchasing power quietly. Keeping too much in low-yield accounts feels safe but isn’t, especially in an elevated inflation environment. The investment management conversation changes in an inflationary world.

What you can actually do about it

The honest answer is that you can’t eliminate inflation risk. But you can plan around it intelligently.

Build inflation assumptions into your retirement projections. Don’t use 2%. Use something closer to the historical average of 3 to 4% and stress-test your plan against higher scenarios.

Don’t hold more cash than you need for near-term expenses. The rest should be working in assets that have historically outpaced inflation over time, whether that’s equities, real estate, or inflation-protected securities. The right mix depends on your timeline and risk tolerance.

Think carefully about the timing of large fixed expenses. If you’re planning to buy a home, upgrade a vehicle, or make other significant purchases in retirement, locking in those costs sooner rather than later has real value in an inflationary environment.

Coordinate your tax planning with your income needs. One of the more overlooked inflation strategies is managing your taxable income in retirement deliberately. The brackets your income lands in, the Medicare premiums you pay, and the tax drag on your withdrawals all interact with purchasing power in ways that require a coordinated plan.

This is precisely the kind of multi-dimensional planning the Treasure Valley Family Office is built for. Inflation doesn’t just affect your investment returns. It affects your tax situation, your healthcare costs, your Social Security strategy, and your estate plan simultaneously. Getting the advisor, the CPA, and the attorney working from the same picture is the only way to manage all of it coherently. You shouldn’t have to quarterback that process yourself.

The bigger picture

We’ve been here before. The 1970s and early 1980s saw sustained inflation far worse than anything we’ve experienced recently. People adapted, planned around it, and built wealth through it. The ones who fared best weren’t the ones who predicted inflation perfectly. They were the ones who had a plan flexible enough to account for uncertainty.

That’s really the whole point of financial planning, isn’t it? Not to predict the future, but to build a plan that works across a range of futures.

The prices aren’t going back to where they were. That’s the uncomfortable reality. But with the right plan in place, you can build a retirement that holds its ground against inflation rather than getting slowly eaten by it.

Money is a tool. And like any tool, it works best when you’re intentional about how you use it. The goal isn’t just to accumulate enough. It’s to make sure what you’ve built keeps working for you over a lifetime, regardless of what the CPI does next year.

That’s the kind of Compound Impact™ that actually matters: the decisions you make today about inflation, income, and investment compounding forward into the retirement you actually want to live.

If you’re within five years of retirement and you’re not sure your plan accounts for where inflation is headed, that’s the conversation we have every day.

Request a private consult. No pressure. Just an honest look at where things stand.

Questions we hear about inflation and retirement planning

Will prices ever come back down to where they were before COVID?

Almost certainly not for most goods and services. What we call “deflation,” a broad decline in prices, is historically rare and often associated with economic recessions or worse. The realistic best-case scenario is that inflation stabilizes at a historically normal rate of 2 to 3% per year from here. The prices are the new baseline.

How does inflation affect my Social Security benefit?

Social Security includes an annual cost-of-living adjustment (COLA) based on the CPI. In high-inflation years this has helped, but the COLA formula doesn’t always track what retirees actually spend. Healthcare costs in particular tend to rise faster than the general CPI, meaning Social Security recipients often feel they’re falling behind even after COLA increases.

How much of my retirement portfolio should be in inflation-protected assets?

This depends on your timeline, income sources, and risk tolerance. There’s no universal answer. Generally, the closer you are to retirement and the more dependent you are on portfolio withdrawals, the more important it is to have a portion of your assets in inflation-resistant categories. This is a conversation worth having with your advisor before you retire, not after.

Does inflation affect my Roth conversion strategy?

Yes. In an inflationary environment, tax brackets can move in ways that affect the optimal conversion amount year by year. Higher inflation often means higher income from certain assets, which can push you into a higher bracket than expected. A coordinated plan between your advisor and CPA is especially important when inflation is elevated.

What is the Treasure Valley Family Office doing to help clients manage inflation risk?

We build inflation assumptions explicitly into every retirement income plan rather than treating it as a footnote. We coordinate investment strategy, tax planning, and Social Security timing with inflation in mind. And we review plans regularly rather than setting and forgetting them, because an inflationary environment changes the math more quickly than a stable one.

Treasure Valley Financial Planning is a fiduciary financial planning firm based in Meridian, Idaho, serving Micron Technology employees and tech professionals across the Treasure Valley and nationwide. This article is for educational purposes only and does not constitute investment or tax advice. Consult a qualified financial professional for guidance specific to your situation.

Sources: U.S. Bureau of Labor Statistics, Consumer Price Index April 2026; Federal Reserve FAQ on inflation targets; US Inflation Calculator historical data; U.S. Treasury TBAC Economic Policy Statement Q2 2026.