Guidance for Retiring in a High Inflation Market

Retirement is often referred to as our golden years, and for many on-the-cusp retirees, it’s exciting to anticipate what the future will be.

But for those just beginning or near retirement, the market drops due to high inflation could create uneasy feelings about the future.

The resulting market downturn as a result of high inflation doesn't necessarily mean retirement plans should be discarded. Furthermore, it's not the time for hasty actions, but it’s the time to be patient and employ strategic long-term planning that involves proactive moves to protect your retirement goals. These five steps can help you through it.

  1. Stay Patient: The market thrives on emotions, so it’s important to remain calm and patient. We’ve seen fluctuations in the market like this before. I'm sure everyone remembers the March 2020 Covid scare.
    Studies show that those who try to time the market with knee-jerk financial decisions, often fare worse than those who stay the course. While this is difficult, it can be detrimental to let short-term circumstances and emotions affect your long-term plan.
  2. Meet Your Needs: If you’re retired, then you may need to pull from your accounts each month in order to survive. But even more so in a high inflation environment, you have to regularly monitor your cash flow and spending. Create a budget for the items you need to pay for each month and ensure your needs are met.
  3. Be Conservative: Similarly, assess your spending habits and avoid unnecessary withdrawals. This isn’t the best time to raid retirement accounts for your dream car.
  4. Find Balance: This is an excellent time to reevaluate your current portfolio. If you are managing your assets yourself, a rebalance may be needed. Depending on how the market downturn has impacted you, you might also need to assess your allocation in order to achieve your goals. Please keep in mind it is always important to consider your risk tolerance.
  5. Find the Silver Linings: Market downturns are often excellent times to pursue retirement strategies. Conversions of Roth IRAs, tax planning, and investment opportunities are just a few of the financial planning considerations that can pay off over the long term in retirement.

At McBeath Financial Group, we believe proper planning is the best strategy to prepare for retirement — regardless of when you choose to do so. If you have questions about the status of your retirement plans or concerns about how high inflation will affect these plans, please reach out. We’re here to guide you through this downturn.

Krista McBeath is an Investment Advisor, Chartered Financial Consultant, a Licensed Insurance Advisor, a Fiduciary, and an experienced tax advisor who specializes in financial planning, investments, and insurance.

She utilizes advanced tools for in-depth calculations that analyze tax and retirement scenarios to help their clients avoid a future tax time-bomb.  Whether this means enjoying more of your hard-earned money in retirement or passing along assets to loved ones, with less tax burden, planning makes the difference.

Her new book, The Generational Wealth System outlines a holistic approach to preserving lifestyle, wealth and legacy.

click to schedule an appointment with financial planner Krista McBeath of Normal IL