Inflation is something that happens in the past, e.g. the CSO tells us that the CPI rose by 8.9% between November 2021 and November 2022, but unless you have a crystal ball, no one knows what it will be in the future, i.e. until its rate is determined by the CSO or Eurostat. Investment is all about the future, i.e. buying assets today to stake a claim on the future earnings of the asset. The aim of the European Central Bank is price stability by maintaining the value of the euro. So if you decide to move your savings from euro deposits (e.g. bank accounts; state savings) to risky assets you are in effect betting against the ability of the ECB to provide price stability, which is something a hedge fund might do but not normally a saver.
In Jan 2022 the annual CPI was up by 5% , let’s say at that stage you correctly estimated that inflation was set to increase significantly and you moved some of your savings into risky assets, so how did you perform?
In 2022, eurozone equities declined by 6%; European properties declined by 30%; eurozone government bonds declined by 16%; and American equities in euro terms declined by 14%. (Figures taken from representative funds sold by Zurich.) That’s your nominal return. Your real, i.e. after inflation return, when you account for 8% inflation, is eurozone equities -14%; European property -38%; eurozone government bonds -24% and American equities -22%. But if you stayed in bank accounts/state savings your return was -8% (less whatever meagre interest you received). So you didn’t do too badly, considering the investment alternatives in 2022. You did better than almost anybody who switched from their savings to risky assets. [There were some asset classes that did provide a positive return, e.g. gold, commodities, timber, but these are unlikely to be the first choice of a retail investor whose objective is wealth maintenance.] And if you switched significant amounts of your savings you would now be suffering from ‘buyers remorse’. People say cash savings are ravaged by inflation, and while this is correct underperforming risky assets are similarly ravaged, both by inflation and by capital loss.
So what should you do? One is to spend money to make your retirement easier, e.g. new bathroom, new kitchen, improved heating, etc. You say your house doesn't ‘need’ an upgrade, but this is neither here nor there. Having worked all your life and now having some cash in retirement, you don’t have to justify prudent expenditure on yourself to yourself. Remember, your current savings are deferred spending from the past. Spend it now.
The other issue is the ECB. ECB didn’t exactly cover itself in glory in the eurozone sovereign debt crisis of 2008 – 2012. And there are other serious concerns, include it is too sluggish in dealing with inflation. So it might be prudent in this situation to diversify your holding from euro cash, the value of which is controlled by the ECB, to e.g. eurozone equities, the value of which is determined by the market. But I would not look at this as an investment; rather as the payment for insurance to protect the value of your savings where the ECB’s monetary policy fails. The equities may well also underperform, but should (eventuality) revert. But if you do this you must understand the risk associated with investment in equities.
[[Disclaimer: The above is comment / observation and is not a recommendation to follow any particular investment strategy or to buy / not buy any particular fund or stock.]