How to Protect Yourself Against Inflation

En español | Pedro Arrivillaga recalls the long lines in front of grocery stores in Chile in the early 1970s. The prices for sugar, coffee and pasta were rising two or three times a day on the black market — dollars only. "We had little idea of where prices were going," says Arrivillaga, 57, a business manager in Santiago. "Buying goods was very difficult. Saving was impossible. The inflation rate made daily living a challenge."

See also: 99 great ways to save.

The threat of high inflation in the United States has been making headlines lately. The concern with runaway inflation started last winter with the spike in oil prices, and continued through the summer budget debates in Washington that brought the growing government debt into the spotlight. Seven in 10 pre-retirees say they're very or somewhat concerned about inflation risk, according to a survey by the Society of Actuaries.

Hispanics who lived through the upheaval in countries like Chile, Argentina, Bolivia, Peru and Uruguay might be especially fearful, though experts say that hyperinflation is highly unlikely here and that any inflation we experience should be manageable. Still, even mild inflation is worth guarding against. This holds true especially for those nearing retirement, already retired or on a fixed income, all of whom traditionally suffer most from rising prices.

The United States has never seen inflation like that of its southern neighbors, such as Bolivia, where prices increased in 1985 by 12,000 percent, according to some estimates. Although inflation in the United States peaked at 14 percent in 1980, the average over the past century has been 3.24 percent, a statistic that hasn't changed in the last few years.