The return you earn on your retirement nest egg gets a bite taken out of it from inflation. And it’s a never-ending battle.

Let’s say your savings and investments yielded a rate of return of 7%, but if the inflation rate was 2.9%, your real rate of return will be 3.98%. (And Uncle Sam hasn’t taken his bite out of it yet)

It’s easy to see that all your best efforts to build and maintain your nest egg feels like a race on a treadmill.

Keeping ahead of inflation becomes very important as you near retirement and after you’re living in retirement. As many people prepare to retire, it is good financial advice to consider positioning your portfolio to be a little more conservative so you’re not as subject to the ups and downs of the market. However, if you don’t take the impact of inflation into account as you plan your income stream, you can actually lose ground over the long term.

Since the economy will always fluctuate, inflation will also continue to erode at purchasing power of your savings. But if you know that there are inflation gremlins hiding around the corner…you’ll be able to stay ahead of the game.