Skip to main content


Retirees: Assess How Inflation And Stock Market Volatility Has Impacted Your Finances

10 Minute Read

If you’re approaching retirement or have recently retired, you might be concerned that the recent decline in the stock market or high inflation could derail your retirement. And indeed, there are good reasons to pay attention in today’s uncertain environment. But instead of being paralyzed with worry or making the wrong moves, channel your fear into motivation to learn what you can do to protect your retirement finances.

History has shown that in uncertain times, the worst thing you can do is cash out your investments in the stock market or fall prey to salespeople who promise they can take care of you and your money if you buy something they’re selling.

The first step

Instead of worrying or panicking, you’ll want to learn how vulnerable your retirement finances really are to stock market volatility and inflation. Don’t focus on the daily swings in the stock market or the news headlines that scream inflation is on the rise. Instead, understand how your monthly and annual finances are truly impacted. This information can help you assess if you should make any changes to your retirement investments and monthly finances.

To get started, you’ll want to keep in mind the common-sense formula for retirement security: I > E, or your income should be greater than your living expenses.

Let’s look at each side of this formula.

Assess the vulnerability of your retirement income

To determine whether you have the regular cashflow you need to cover your expenses, review all of your retirement income sources:

Social Security. For most retirees, Social Security income comprises at least half of their regular monthly income and often up to three-quarters or more. Remember that Social Security benefits are increased for inflation each year with a cost-of-living-adjustment (COLA), and the income doesn’t drop if the stock market crashes. As a result, Social Security benefits provide protection against both risks.

Your January 2022 Social Security check should have reflected a 5.9% COLA. Some experts have estimated that the 2023 COLA could be as high as 8%. Of course, your actual living expenses could increase at a higher or lower rate than the COLA. Indeed, for many retirees, the 2022 COLA was consumed by the increase in Medicare premiums, leaving little to no extra money to address other cost increases.

Pensions, if applicable. If you’re fortunate to receive a monthly pension from your former employer, that income won’t go down if the stock market crashes. However, most traditional pensions don’t increase for cost-of-living, so it’s most likely vulnerable to being eroded by inflation.

If you receive a significant traditional pension, it’s likely that a very high portion—80% or more—of your regular retirement income, which includes Social Security benefits and your pension, is protected against stock market crashes. If this lifetime income covers most or all of your basic living expenses, then you can breathe a sigh of relief about stock market volatility. That’s less the case with inflation, however, since typically only Social Security benefits protect you against inflation.

Withdrawals from retirement investments. Many retirees invest the money in their 401(k) and IRAs and make systematic withdrawals to supplement their Social Security or pension income. Many experts recommend a dynamic withdrawal strategy, where you periodically adjust your regular withdrawals up or down to reflect recent investment performance. In this case, you’ll want to assess the extent of any losses you may have experienced so far in 2022.

Your retirement provider should be able to tell you the year-to-date losses for any mutual funds or ETFs that you may own in your retirement savings. For example, so far in 2022, funds with asset allocations typical for retirees have declined by 10% to 20%. Determine any losses you’ve experienced, and consider making a downward adjustment to your periodic withdrawals.

Other income. Consider the impact of inflation on any other retirement income you may receive, such as your paycheck for working part time or rental income.

Now that you have a picture of how your total retirement income is impacted by inflation and stock market declines, it’s time to consider your expenses.

Assess the impact on your living expenses

If you’re like most retirees, your largest expense is for housing, which covers your mortgage payments or rent, property taxes, homeowners insurance, and maintenance costs. While it’s likely your mortgage payment hasn’t increased or decreased, many other expenses might have increased recently. 

Next up are your premiums for Medicare and medical insurance. These are typically adjusted once at the beginning of the calendar year. Given the current environment, it might be tricky to predict how these premiums might increase for 2023. Some publications are indicating that Traditional Medicare premiums may not increase next year, following the substantial increase for 2022. However, there’s also a chance that premiums for Medicare Advantage Plans could increase by 8% or more for 2023.

Once you’ve estimated the impact of inflation and stock market declines on your total retirement income and your living expenses, you can estimate whether the margin you’ve built into your retirement finances is sufficient to contain any damage. You’ll feel better having the information you need to determine whether you should take any corrective actions. Knowledge is power—and much more effective than worry and panic.


This article was written by Steve Vernon from Forbes and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to


Related articles

Inflation Affects Your Retirement Savings—Here's How

2 Alternatives To Required Minimum Distributions - RMD Strategies

6 Strategies For Weathering Market Volatility

2 Pros And 2 Cons Of Working In Retirement

3 Strategies For Reducing Tax Risks In Retirement

Income Investing: 7 Money-Generating Assets for your Portfolio and How to Get Started

4 Real Risks of Investing (and what to do about them)

Subscribe to Investments Insights

Meet with a Financial Advisor

Ready to invest? We're ready too. Let us introduce you to your UnionBanc Investment Services Financial Advisor.

Get started

UnionBanc Investment Services is making this article available for general informational purposes only and does not purport it to be a complete analysis of the subject discussed. Nothing contained in this material is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The general information contained in this article should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional.

Brokerage and investment advisory services are available through UnionBanc Investment Services LLC, an SEC-registered broker-dealer, investment adviser, member FINRA/SIPC, and subsidiary of MUFG Union Bank, N.A. Insurance services are available through UnionBanc Insurance Services, a division of MUFG Union Bank, N.A. with a California domicile and principal place of business at 1201 Camino Del Mar, Suite 208, Del Mar, CA 92014. California State Insurance License No. 0817733. Non-deposit investment and insurance products: • Are NOT deposits or other obligations of, or guaranteed by, the Bank or any Bank affiliate • Are NOT insured by the FDIC or by any other federal government agency • Are subject to investment risks, including possible loss of the principal amount invested • Insurance and annuities are products of the insurance carriers.