Will Your Nest Egg Withstand Inflation and Market Volatility?

Remember, Nothing Stays the Same Forever 

Market sentiment can swing dramatically due to political and economic uncertainties. While everyone hopes to avoid increased inflation or a recession, it’s important to approach market challenges with a strategic mindset. Remember, markets, like life, are always changing (Kitces, 2025). The obstacles you faced in your early 20s are different from those you face now, and while the time it takes to overcome challenges varies, they rarely last forever. Reacting impulsively out of fear or emotion can hinder your progress and keep you from reaching your financial goals.

So, when considering market conditions, what can investors do? Depending on their specific situation, the answers vary (AARP, n.d.).

If You’re Young, or You Have More Than 10-15 Years to Retirement

If you have a long time-horizon until retirement, it’s often beneficial to stay invested and continue contributing regularly. The financial strategy known as “dollar cost averaging” involves investing a fixed amount consistently over time, regardless of market ups and downs. This approach can help smooth out the effects of market volatility and potentially lead to better long-term results.

Historical data shows that investors who try to time the market by exiting after downturns often underperform those who remain fully invested (Kitces, 2025). When you leave the market, you not only avoid some losses but also miss out on the market’s best-performing days. Missing just a few of these key days can significantly reduce your overall returns. Remember, just like in life, nothing stays bad forever; good days will come again. The market is no different.

If You’re Older and Getting Close to Retirement

As you get closer to retirement, continuing to stay fully exposed to volatile stock markets may not be advisable due to a financial principle called “sequence of returns risk” (AARP, n.d.). All else being equal, someone who retires during a market downturn and begins withdrawing funds may see their retirement savings decline significantly over time compared to someone who retires when markets are rising. This is especially important to consider early in retirement when your account balance is at its highest. Since no one can predict market timing, rebalancing your portfolio to reduce risk is generally recommended.

Consider Rebalancing Your Portfolio 

First, you’ll want to ensure your portfolio’s allocation among international stocks, large-cap and mid-cap stocks, bonds, cash, and fixed income options aligns with your financial goals and the current economic environment. Different asset classes go through varying cycles of performance, which can help manage inflationary pressures. Keep in mind, there are also other ways to reduce risk in your portfolio, especially as you approach retirement.

Sometimes considered a separate asset class, annuities have become a popular option for many nearing or in retirement (Limra, 2025). An annuity is a contract between an individual and an insurance company designed to provide a monthly income stream during retirement. Some annuities offer income that can last a lifetime, backed by the financial strength of the issuing insurance company. There are many different types of annuities, and contracts can be complex (Limra, 2025). They tend to be illiquid, so it’s important to maintain other cash and investment assets to balance your retirement plan even if you have one or more annuities. Additionally, annuities are not suitable for everyone. It is advisable to work with a financial professional to review your overall plan, compare options, and carefully examine contract terms.

Other Personal Actions You Can Take to Manage Inflation

Additionally, to help make your dollar in your day-to-day life last longer, do a thorough review of your spending. This is the time to evaluate essential vs. discretionary expenses, for example, a mortgage versus a new car. This gives you a chance to identify unnecessary spending that you can cut back on. Most people are shocked by how much they were spending on things they did not need!

Some common expenses that are good to look at critically during this audit:

• Takeout & Dining – Frequent restaurant visits, coffee runs, food delivery, and takeout orders.
• Subscription Services – Streaming (Netflix, Hulu, HBO Max), music, gaming, news, and fitness apps.
• Retail & Impulse Shopping – Clothing, accessories, home décor, and non-essential purchases.
• Unused Memberships – Gym memberships, fitness classes, warehouse clubs, and subscription boxes.
• Premium TV Packages – Expensive cable or satellite plans with unnecessary channels.
• Frequent Travel – Weekend getaways, flights, hotels, and vacation entertainment costs.
• Luxury & Self-Care – Salon visits, spa treatments, manicures, and pedicures.
• High-End Brands – Designer clothing, accessories, and premium tech gadgets.
• Hobby Expenses – Collectibles, gaming, crafting supplies, and other leisure-related purchases.
• Tech Upgrades – Constantly replacing smartphones, tablets, and accessories with the latest models.
• Costly Entertainment – Concerts, sporting events, amusement parks, and other high-ticket experiences.

Also, see if you can negotiate on those essential bills. While many essential bills are a fixed amount, some can be adjusted or reduced. You may be able to lower expenses for service contracts like internet or insurance. You may also be able to lower your credit card rates. While there’s no guarantee, it never hurts to call a service representative and see if you can get a better price for the things you have to pay for. 

While dealing with inflation and market volatility is no one’s ideal situation, it doesn’t have to be a nightmare either. With a strategic approach, you can get through this stressful time and on to the other side! Do you need help getting your accumulated assets inflation-ready and putting a plan together to hedge against market risk? Call us today! 

Sources 

https://www.kitces.com/blog/clearnomics-10-charts-recession-fears-tariff-risk-market-volatility-economy-investor-anxiety/

https://www.limra.com/en/newsroom/news-releases/2025/limra-2024-retail-annuity-sales-power-to-a-record-%24432.4-billion/  

https://www.aarpinternational.org/initiatives/aging-readiness-competitiveness-arc/united-states