Last week we looked at some of the problems associated with traditional “safe” investment strategies and high inflation rates.

The alternative isn’t abandoning safety for stock market risk — it’s recognizing that principal protection exists in products most retirees never consider. Fixed indexed annuities and structured notes provide downside protection while participating in market growth, offering the potential to outpace inflation without the stomach-churning volatility retirees fear.

Here are some other possible investment strategies to consider:

Bond ladders: Reclaiming traditional income tools

The bond market carnage of 2022-2023 scared many retirees away from bonds entirely. Watching supposedly “safe” bond funds lose 10%-20% in value as interest rates spiked felt like betrayal — bonds were supposed to provide stability, not volatility.

But the rate increases that hurt existing bondholders created opportunity for new bond buyers. Individual bonds purchased at current yields and held to maturity now offer compelling returns with defined risk. A Utah retiree can build a ladder of investment-grade corporate or municipal bonds yielding 5%-6%, with staggered maturities providing both income and liquidity as bonds mature.

Unlike bond funds — which fluctuate in value as rates change and never mature — individual bonds return principal at maturity regardless of interim rate movements. A 5-year corporate bond purchased at par yielding 5.5% will return exactly par value in five years while paying 5.5% interest annually, regardless of whether rates rise, fall, or gyrate wildly in between.

For inflation protection, Treasury Inflation-Protected Securities (TIPS) offer explicit inflation linkage. Principal values adjust with CPI, and interest payments are calculated on the adjusted principal, providing returns that automatically account for inflation. Current TIPS yields in the 2%-2.5% range above inflation mean real returns of 2%-2.5% — significantly better than CDs losing ground to inflation.

Utah retirees can also benefit from municipal bonds, though Utah’s relatively low state income tax rate (4.65%) reduces their advantage compared to high-tax states. Still, for retirees in higher federal brackets, tax-exempt municipal bonds yielding 4%-4.5% can provide after-tax returns equivalent to taxable bonds yielding 6%-7%.

The key with bonds is avoiding the mistakes that hurt retirees in 2022. Don’t buy bond funds for short-term money — use individual bonds you intend to hold to maturity. Don’t reach for yield by purchasing low-quality credits — stick to investment-grade bonds with solid financial backing. Don’t build a ladder all at one maturity — stagger maturities to provide liquidity at regular intervals and reduce interest rate risk.

Dividend growth stocks: Income that rises

The suggestion of stocks terrifies many conservative retirees, and understandably so given market volatility. But dividend growth stocks — shares of stable companies with long histories of increasing dividend payments — offer income characteristics that CDs and bonds can’t match: payments that grow over time.

A utility company paying a 4% dividend yield that increases dividends 5% annually provides income that compounds. Year one: $4,000 on a $100,000 investment. Year five: $4,865. Year 10: $6,289. Year 20: $10,212. That growing income stream provides built-in inflation protection that fixed-income investments lack.

The risk is different from CDs, certainly — stock prices fluctuate, dividends can be cut, and nothing is guaranteed. But dividend aristocrats — companies that have increased dividends for 25+ consecutive years — demonstrate remarkable stability. These aren’t speculative growth stocks; they’re mature businesses with sustainable competitive advantages and shareholder-friendly management.

For Utah retirees, a modest allocation to dividend growth stocks — perhaps 20-30% of portfolio — provides inflation-fighting income growth while keeping most assets in principal-protected vehicles. The stock portion will fluctuate in value, but as long as dividends continue and grow, the income stream accomplishes its purpose regardless of daily price changes.

Dividend-focused exchange-traded funds (ETFs) provide diversification across dozens of dividend-paying stocks, reducing single-company risk. An ETF holding 50-100 dividend aristocrats eliminates the danger of any single company cutting dividends while still providing overall income growth as the portfolio of companies collectively increases payouts.

The psychological key is separating income from principal. As long as dividends maintain and grow, retirees can live on the income regardless of stock price fluctuations. Selling shares to raise cash during market downturns is how retirees get hurt in equities. Using dividends for income while letting principal fluctuate removes that danger.

The 60/40 rethink for Utah retirees

Traditional retirement advice suggested 60% stocks and 40% bonds for balanced growth and income. That model struggled in 2022 when both stocks and bonds fell simultaneously, undermining the diversification rationale.

A Utah-specific alternative for conservative retirees might look more like: 30% fixed indexed annuities for principal-protected growth participation, 20% MYGAs or bond ladders for near-term income and liquidity, 20% dividend growth stocks for rising income, 20% TIPS or I-Bonds for explicit inflation protection, and 10% cash for emergencies and opportunities.

This structure addresses multiple goals simultaneously. Principal protection through the FIA and MYGA components provides safety and sleep-at-night comfort. Growth participation through FIAs and dividend stocks fights inflation. Rising income through dividend growth maintains purchasing power as costs increase. Explicit inflation protection through TIPS provides a floor even if other strategies underperform. Cash provides liquidity for emergencies without forcing liquidations at inopportune times.

The exact allocation varies with individual circumstances — age, risk tolerance, income needs, legacy goals, and other assets like pensions or Social Security. A 68-year-old Utah retiree with a $50,000 pension might be more aggressive with portfolio growth since pension income covers fixed expenses. A 72-year-old with no pension might allocate more heavily to guaranteed income through annuities and less to stocks.

The critical principle is matching strategy to Utah’s inflation reality rather than generic national assumptions. Allocations that work in low-inflation environments fail in Utah’s higher-cost trajectory. Strategies that preserved purchasing power when inflation ran 2%-3% nationally prove inadequate when local costs rise 5-6% annually.

Real estate: The double-edged Utah sword

Utah’s booming real estate market creates both inflation problems and potential solutions for retirees. Rising property values increase property taxes and home insurance, eroding fixed incomes. But those same rising values represent accumulated wealth that can be deployed for inflation protection.

Reverse mortgages remain controversial and often misunderstood, but they offer Utah retirees with substantial home equity a way to convert illiquid assets into inflation-fighting income. A 70-year-old couple with a $650,000 home and no mortgage might access $300,000 through a reverse mortgage, repositioning those funds into FIAs, dividend stocks, or other growth-oriented vehicles while continuing to live in the home.

The reverse mortgage doesn’t require monthly payments — the balance grows over time as interest accrues, and the loan is repaid when the home is eventually sold. Meanwhile, the extracted equity generates returns that outpace the loan’s growth rate, especially if invested in inflation-protected vehicles. The couple effectively uses their home’s appreciated value to fight inflation rather than letting it sit as illiquid wealth while their investment accounts lose purchasing power.

Real estate investment trusts (REITs) provide another avenue for inflation-sensitive exposure. REITs own income-producing properties — apartments, shopping centers, office buildings, warehouses — and distribute rental income to shareholders. As inflation drives rent increases, REIT income tends to grow, providing inflation-linked returns without the headaches of direct property ownership.

Utah-focused REITs or those heavily invested in Mountain West properties benefit from the state’s population growth and economic expansion. As more people move to Utah, demand for apartments, retail space, and logistics facilities increases, supporting rent growth and property values. REIT dividends provide current income while NAV growth provides capital appreciation — both tend to track inflation over time.

The risks include interest rate sensitivity — REITs often decline when rates rise as higher yields make bonds relatively more attractive–and property market cycles. But for retirees with 15-25 year time horizons, these shorter-term fluctuations matter less than the long-term inflation-tracking characteristics.

The timing window for action

Interest rate environments change, and today’s opportunity to lock in reasonable yields won’t last indefinitely. When the Federal Reserve eventually cuts rates — likely within 12-24 months based on economic forecasts — CD and MYGA yields will fall, bond prices will rise (reducing future bond yields), and income-generating opportunities will diminish.

For Utah retirees currently in CDs or money market accounts, the window to reposition into higher-yielding, inflation-protected alternatives is now, not later. Once rates fall, the MYGAs currently yielding 5%-5.5% will drop to 3.5%-4%. The bond ladder opportunities available today disappear as bonds are bid up in price. The FIA participation rates and caps currently available get reduced as insurers adjust products for lower rate environments.

This doesn’t mean rushing into products without understanding them or working with advisors who may have conflicts of interest in certain product recommendations. It means recognizing that the current rate environment creates opportunities to lock in inflation-fighting returns that may not be available in two years.

For a 65-year-old Utah retiree with $600,000 in CDs earning 4.5%, repositioning $400,000 into a mix of MYGAs, FIAs, and dividend growth investments could reasonably generate 6%-7% average returns over time — adding $9,000-15,000 annually in additional income while providing better inflation protection. Over a 25-year retirement, that compounds to hundreds of thousands of dollars in additional purchasing power.

The cost of inaction in an inflation state

Every year Utah retirees remain in low-yielding cash equivalents while local inflation runs higher than returns, they lock in permanent purchasing power losses. Unlike market losses — which can be recovered when markets rebound — inflation losses compound irreversibly. The $100 that buys groceries today but falls behind inflation is permanently diminished; it will never buy the same basket of goods again.

For retirees in their 60s and early 70s with 20-30 year life expectancies, this erosion represents catastrophic financial risk disguised as safety. The portfolio that starts at $800,000 and “safely” earns 4% while inflation runs 5%-6% will have roughly half its real purchasing power after 20 years. That’s not preserving wealth — it’s systematically dissipating it.

The irony cuts deep: retirees who spent 30-40 years carefully saving, investing conservatively, and building nest eggs now watch those accomplishments slowly evaporate by choosing “safe” options that fail to address inflation realities. The discipline that built wealth is undermined by strategies that can’t preserve it.

Utah’s unique economic environment — robust growth, population influx, limited housing, energy market pressures — creates inflation dynamics that standard retirement planning doesn’t address. National guidelines suggesting 3%-4% safe withdrawal rates based on historical inflation assumptions don’t account for states where inflation consistently runs higher. Conservative allocation models designed for average costs don’t work when local expenses climb faster.

The solution requires acknowledging that safety isn’t the absence of market risk — it’s the presence of purchasing power protection across retirement. True safety means maintaining the ability to pay for housing, healthcare, food, utilities, and discretionary spending throughout retirement. If a strategy protects nominal principal while real purchasing power erodes, it’s not safe at all — it just feels safe until the math catches up.

For Utah retirees between 55 and 80, most holding substantial portions of portfolios in cash equivalents and traditional fixed income, the time to address this gap is now. Not when inflation has already consumed another 10% of purchasing power. Not when interest rates have fallen and today’s opportunities have vanished. Not when health declines and making changes becomes more difficult.

The goal isn’t chasing returns or taking unnecessary risk. It’s recognizing that in Utah’s economic environment, standing still is moving backward, and that principal protection without inflation protection isn’t protection at all. It’s an illusion that preserves numbers on statements while standard of living slowly degrades — until families realize too late that the “safe” choices were the riskiest decisions of all.

Lyle Boss, The REAL BOSS Financial, endorsed by Glenn Beck as the premier retirement advisor for Utah and the Mountain West States. Boss Financial, 955 Chambers St. Suite 250, Ogden, UT 84403. Telephone: 801-475-9400. https://www.safemoneylyleboss.com.