From Scrubs to Sunshine: How COLA Ensures Your Retirement Stays Infation-Proof

As a healthcare professional, you’ve spent years navigating the complex world of patient care, deciphering lab results, and tackling the ever-changing challenges of medicine. Planning for retirement might feel like stepping into uncharted territory, but there’s one key concept that parallels your work: staying ahead of a condition before it becomes critical. In the financial world, that “condition” is inflation, and “preventative care” is a little acronym called COLA—Cost-of-Living Adjustment.

Just like monitoring a patient’s vital signs helps you adjust treatment plans, COLA keeps your retirement income healthy by adjusting for the rising cost of living. Let’s break down how this works, why it’s essential, and how you can structure your retirement plan to weather inflation’s long-term impact.


Handwritten list of amenities that go up in time.

What is COLA? A Prescription for Inflation Protection

Imagine inflation as a chronic condition. It slowly diminishes your purchasing power over time. You might not notice it day-to-day, but over a decade or two, it can significantly affect your lifestyle. That gallon of milk that costs $4 today could cost $6 in 15 years. For retirees on fixed incomes, inflation is a sneaky adversary, quietly diminishing their ability to cover essential expenses.

COLA is the financial antidote to this issue. It’s a mechanism built into certain retirement income streams—like Social Security or some pensions—that automatically adjusts payments to keep pace with inflation. The idea is simple: as the cost of living rises, so does your income.

For healthcare professionals, COLA is like titrating medication dosages for a patient whose condition fluctuates. You adjust the dose to ensure the treatment remains effective, preventing a crisis. Similarly, COLA ensures your income doesn’t lose effectiveness as inflation creeps upward.


Medical ventilator.

How COLA Works: A Financial Ventilator for Your Income

In the same way that ventilators adapt to meet a patient’s oxygen needs, COLA adapts your retirement income to keep it “breathing” in an inflationary environment. Social Security, for instance, applies an annual COLA based on changes in the Consumer Price Index (CPI). The CPI measures the cost of goods and services, from groceries to medical care, and reflects the average rate of inflation.

Let’s look at an example:
Suppose you retire today and start receiving $2,000 a month in Social Security benefits. If inflation averages 2% per year, your purchasing power would shrink by nearly 22% over 10 years without adjustments. However, if your benefits are tied to COLA, they increase annually to match inflation, maintaining their real value.

While Social Security is a vital source of inflation-protected income, not all retirement income streams include COLA. Many private pensions and annuities are fixed, meaning their purchasing power erodes over time. That’s why understanding which income sources have built-in COLA and which don’t is crucial for planning your retirement.


Man being vaccinated on upper arm.

Inflation in Action: Why COLA Matters to Healthcare Professionals

As a healthcare provider, you know the importance of planning for worst-case scenarios. You wouldn’t discharge a patient recovering from surgery without ensuring they have the resources for post-operative care. Similarly, planning for retirement means preparing for the inevitable rise in expenses over time.

Healthcare professionals face unique challenges with inflation, especially considering how medical costs tend to outpace general inflation. Fidelity estimates that the average 65-year-old couple retiring today will need over $315,000 to cover healthcare expenses in retirement—and that figure doesn’t include long-term care.

Think of COLA as a financial vaccine that bolsters your retirement plan against these rising costs. Social Security’s COLA is a start, but it’s just one part of a comprehensive strategy to maintain your financial “vital signs” throughout retirement.


The Anatomy of a COLA-Proof Retirement Plan

Creating a COLA-proof retirement plan is like designing a care plan for a complex patient. You need a mix of treatments that address both immediate needs and long-term risks. Here’s how to build a retirement strategy that stands up to inflation:

1. Maximize Social Security Benefits

Social Security is the backbone of many retirees’ income plans because of its guaranteed payments and COLA protection. As a healthcare professional, you’re no stranger to maximizing resources, and Social Security offers a significant opportunity.

Key Steps:

  • Delay Filing: By delaying benefits past your full retirement age (FRA), you increase your monthly payment by about 8% per year until age 70. This higher base amount benefits from COLA, amplifying its impact.

  • Coordinate with Spousal Benefits: Married couples can use strategies to maximize lifetime Social Security income, such as one spouse claiming early while the other delays.

Think of it like using a staged treatment plan for a patient: the early intervention provides immediate support while delaying certain treatments maximizes long-term results.

2. Supplement with Inflation-Protected Investments

Beyond Social Security, you’ll need other income streams to cover your expenses. Here’s where investment planning comes into play.

Options to Consider:

  • Treasury Inflation-Protected Securities (TIPS): These are government bonds designed to protect against inflation. Their principal value adjusts with the CPI, ensuring your investment keeps pace with rising costs.

  • Dividend-Growing Stocks: Some companies regularly increase their dividends, which can provide a growing income stream over time.

  • Real Estate: Rental properties or REITs (Real Estate Investment Trusts) can offer income that tends to rise with inflation.

Think of these options like supplemental oxygen for your retirement plan, ensuring you can “breathe easy” even as costs rise.

4. Incorporate Flexible Spending Strategies

Flexibility is key when managing a chronic condition, and the same goes for your finances. A mix of fixed and variable income sources gives you the adaptability to adjust as inflation fluctuates.

Examples:

  • Use fixed income sources (like a pension) to cover essential expenses.

  • Use variable income (such as portfolio withdrawals) to manage discretionary spending, adjusting withdrawals based on market performance and inflation.

It’s like creating a care plan with both baseline treatments and as-needed medications, ensuring you can handle both predictable and unexpected costs.

3. Plan for Healthcare Costs

Healthcare inflation is like a rare but aggressive disease—it requires special attention. Medicare provides a baseline of coverage, but out-of-pocket costs can add up quickly.

Strategies:

  • Health Savings Accounts (HSAs): If you’re still working, max out your HSA contributions. These accounts offer tax-free growth and withdrawals for qualified medical expenses, making them a powerful tool for managing healthcare inflation.

  • Medigap Policies: Consider supplemental insurance to cover expenses Medicare doesn’t, such as copays and deductibles.

This is your financial equivalent of specialty care: targeted strategies for a high-risk area of your retirement plan.


Woman getting her blood pressure taken by medical professional.

The Long Game: Monitoring and Adjusting Your Plan

Retirement planning isn’t a set-it-and-forget-it process, just as patient care requires ongoing monitoring. Regular check-ups with your financial advisor can help you adjust your strategy to reflect changes in inflation, healthcare costs, or personal circumstances.

Questions to Ask During a Financial Check-Up:

  • Are my income sources still aligned with my expenses?

  • How has inflation impacted my budget in the past year?

  • Do I need to adjust my investment allocations to maintain purchasing power?

This ongoing oversight ensures your financial health stays on track, much like tracking a patient’s recovery trajectory.


Closing Thoughts: A Retirement as Resilient as Your Career

As a healthcare professional, you’ve dedicated your career to improving others’ quality of life. Your retirement years should reflect the same level of care and intentionality you give your patients. By understanding the role of COLA and building an inflation-resistant strategy, you can transition from scrubs to sunshine with confidence.

Retirement is your time to thrive—not just survive. With a well-designed plan that accounts for inflation, you’ll have the financial stability to enjoy your hard-earned freedom, whether that means traveling, pursuing hobbies, or simply savoring time with loved ones.

After all, just as you wouldn’t discharge a patient without a robust recovery plan, you shouldn’t embark on retirement without ensuring your income is prepared for the long haul. COLA is one of the key tools to keep your retirement healthy and vibrant, no matter how the cost of living changes over time.

By planning proactively and staying adaptable, you’ll ensure your retirement lifestyle doesn’t just survive inflation—it thrives in spite of it. If you need help designing a COLA-proof plan, let’s talk. After all, every great retirement plan starts with a clear diagnosis and the right “treatment.”

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Ivan Havrylyan