Protecting our Roth IRAs from the effects of inflation involves investment strategies that aim to outpace or at least keep up with inflation. In 2023, we have seen a reduction in inflation, with rates being below 3% in July of 2023 with projections to be similar for 2024. This is great for our IRAs today as this is exactly the best time to prepare for the next upswing in inflation. A key factor to doing better in the bad times is how well we prepared in the good times.

The Traditional, Roth IRAs and 401(k)s are so important for our financial future that it is critical to take advantage of this rare moment in inflation rates to review and adjust our portfolios to improve our returns when inflation returns. If you have a financial planner or are working with an institution, below are six areas we think are worth addressing.

Here are a few strategies:

1. Diversify Your Portfolio:

A well-diversified portfolio can help protect against inflation. This could include a mix of equities, bonds, real estate, commodities, or other assets. Diversification can help ensure that some of your investments will likely perform well even when others don’t.

2. Invest in Stocks:

Historically, stocks have provided higher returns over the long term than other types of investments. Although they come with increased risk, they can potentially outpace inflation over time.

3. Consider Real Estate Investment Trusts (REITs):

REITs invest in income-producing real estate. They can provide a steady stream of income and potential capital appreciation. Real estate often keeps up with or exceeds inflation rates. REITs can be held in a Traditional or Roth IRA.

4. Treasury Inflation-Protected Securities (TIPS):

TIPS are government-issued bonds that adjust their principal value with inflation. The interest rate is fixed, but the amount of the interest you receive increases with inflation because it’s calculated on the adjusted principal and can be held in a Traditional or Roth IRA.

5. Commodity Investments:

Commodities like gold, oil, or agricultural products can serve as a hedge against inflation because their prices often rise when inflation increases. Many of these types of investments can only be held in a Self-Directed IRA.

6. Invest in Inflation-Adjusted Annuities:

These are annuities that increase their payments to keep up with inflation. These can be held in a Traditional or Roth IRA, or 401(k).

Once you have reviewed your portfolio and perhaps plan on making changes in what you are holding in your IRA, you may discover that you need to add a Self-Directed Traditional, or Roth, IRA due to the fact that some of the investments listed above can only be held in a Self-Directed IRA.  Self-Directed IRAs can hold real estate, futures, gold, oil and gas assets, and mortgage notes. See more on Self-Directed IRAs


Your benefits from reviewing your portfolio –

For anyone that has said “Boy, I wish I knew then, what I know now”, it is *that*  time, now.  Understanding our investments and keeping up with their current status is so important.  We are at a unique place in time as there are historic lows in inflation, and making adjustments now, before we are in another inflationary period, is just plain smart.

In Closing – 

We want to remind you it’s always best to discuss these strategies with a financial advisor who understands your individual financial situation and goals. They can help you make informed decisions about how best to protect your Traditional IRA, Roth IRA, and 401(k) from the negative investment effects of inflation.  Retire Happy!


What is an IRA?

An IRA (Individual Retirement Account) is a type of savings account that offers tax advantages to individuals to help them save for retirement.

What are the types of IRA accounts? 

The two most common types are the Traditional IRA and Roth IRA. In a Traditional IRA, contributions are tax-deductible, but withdrawals during retirement are taxed. On the other hand, contributions to a Roth IRA are made with after-tax dollars, but withdrawals during retirement are tax-free.

How much can I contribute to an IRA?

For 2024, the maximum total annual contribution for all of your traditional and Roth IRAs combined is $7,000 ($8,000 if you’re age 50 or older).

When can I withdraw from my IRA?

With a Traditional IRA, you can start withdrawing without penalties when you reach age 59½. With a Roth IRA, you can withdraw your contributions at any time, but earnings should not be withdrawn until age 59½ to avoid penalties.

What happens if I withdraw early from my IRA? 

If you withdraw from your Traditional IRA before age 59½, you may have to pay a 10% early withdrawal penalty unless you qualify for an exception. For Roth IRAs, you can withdraw your contributions at any time but if you withdraw earnings before age 59½, you may be subject to the 10% early withdrawal penalty unless an exception applies.

Can I lose money in an IRA?

Sorry, but yes.  While IRAs are generally considered safer long-term investments, they are still subject to market risk and the investments within your IRA account can go up or down in value. It’s important to consider your risk tolerance and investment timeline when choosing investments for your IRA.

As always, we suggest you seek the advice of a financial professional to be sure you understand all of the aspects that could affect your investments.  We always want to assure you make the most of your potential while reducing risk as much as possible.  We want you to retire happy.