Imagine retiring in this market. A 60-year-old who owns a balanced fund—60% allocated to stocks, 40% to bonds—has seen the value of their investment drop by 18% so far this year.

Soaring prices only makes matters worse. Not only does our 60-year-old have less wealth, but also their savings don’t buy what they used to. In fact, financial advisors say their clients have been more preoccupied with gas and food prices than the terrible stock market.

“Inflation is the biggest issue I’ve been hearing about lately,” said Ashlee Walton, senior financial planner at James Investment Research Inc. “Clients don’t have a lot of experience dealing with inflation this high, and they’re worried about it being a longer-term scenario.”

Make no mistake, inflation is the main culprit for the dismal stock market performance in 2022 so far. The Federal Reserve is hiking interest rates to quash price growth, taking cheap money away from stocks and tech companies, and it’s also causing pain and suffering in the bond market.

For nearly everyone, 2022 has been almost as bad as 2008. Here are strategies for retirees and near-retirees to stay on track in a bear market.

For many people, life in retirement may be pretty different than what they’d imagined. Just a quarter of respondents in a recent Employee Benefit Research Institute (EBRI) survey said that their day-to-day experience aligned with what they had expected before retiring.

One of the biggest adjustments is getting by on a fixed income. That’s why Catherine Collinson, chief executive of ​​the Transamerica Center for Retirement Studies, recommends that investors should take a “retirement test drive” before they actually hang up their spurs.

“Find out how easy or difficult it is to stay on budget,” Collinson said. This will make it easier to adjust spending in times of high inflation and economic trouble.

Let’s say your annual household income is $100,000, and your current retirement plan would deliver 80% of your pre-retirement income. Spend a period of time attempting to get by on your anticipated income, rather than what you currently earn.

The transition won’t be easy, but that’s the point of the exercise. Adopting a fixed income requires a psychological shift in intuitively understanding what you can really afford. It’s best to approximate this new lifestyle before playing with live ammo.

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