As home prices drop and consumers struggle to make ends meet, worries about inflation are fading fast. But with the federal government spending money at a blinding rate to keep the economy growing, an inflation scare down the road is a real possibility. Even a bout of tame inflation say, 4% could inflict real pain on retirement lifestyles by raising the cost of living and pummeling the value of bond portfolios. The good news is that you can protect against such a risk by having a decent slice of your retirement portfolio invested in the Treasury's inflation-protected securities, or TIPS. The bonds pay a small yield lately 1% on the 10-year security but the principal and the payout are adjusted on a semiannual basis to reflect changes upward or downward in the Consumer Price Index. Those upward adjustments in your principal are taxable each year, so take care to keep good books. Most of the major fund companies offer TIPS mutual funds, and they typically stagger maturities so you receive a steady payout. You can also buy these bonds directly from the U.S. Treasury at treasurydirect.gov.