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 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 that 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 commonsense formula for retirement security 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 for most retirees social security income comprises at least half of their regular monthly income and often up to threequarters or more remember that social security benefits are increased for inflation each year with a costoflivingadjustment 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 59 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 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 costofliving 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 many retirees invest the money in their 401k 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 yeartodate 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 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 you’ll want to investigate whether these increases are enough to disrupt your budget similarly you may want to estimate recent increases in your monthly utility and gasoline costs 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