Extreme market volatility and inflation have knocked seniors’ retirement savings for a loop—but there are steps you can take to protect your personal wealth, experts say.

Headlines on such catastrophic events like the U.S. defaulting on its debt or the Federal Reserve continuing to raise interest rates aren’t the only factors driving intraday swings in the market as high as 3%. Trading in S&P 500 options is up markedly, too, adding to market gyrations.

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Such acute volatility can reduce a retiree’s retirement savings balance by tens of thousands in just one day.

On top of this, inflation has lowered Social Security benefits’ buying power by a substantial 36% since 2000, according to The Senior Citizens League.

The average senior citizen relying on Social Security benefits would need $517 more per month to cover the cost of daily items, which have risen at higher rates than Social Security’s annual cost-of-living adjustment (COLA).

While the Social Security Administration raised the COLA 8.7% in 2023, the senior citizens group projects this year’s COLA will rise by just 3.1%.

All of this is putting retirees and anyone nearing retirement at a serious disadvantage.

Fortunately, here are 5 steps experts recommend to protect your retirement prospects.

“Despite high inflation and market volatility, a successful, financially secure retirement is possible today,” says Nigel Green, founder and CEO of deVere Group.

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1.) Save & Invest

The first thing anyone seeking a secure retirement should do is save, no matter how old they are or how much or little they make, financial planners agree.

“The earlier you start saving, the more time your money has to grow and enjoy the benefits of compound interest,” Green says.

Paired with this is the importance of investing, Green stresses.

“Volatility always brings opportunity for investors, as it creates definite winners and losers,” he says.

2.) Work with an Adviser

Inexperienced or risk-averse investors can tackle stock and bond investing by working with a financial planner, Green says. “With the right professional advice, the current market conditions can be useful,” he says, even despite wild swings.

“Those who are serious about using the market turbulence to build and grow their wealth for the long term should work with an adviser to identify the winners and to rebalance their investment portfolios accordingly,” Green says.

401(k) investors who may not have access to a financial or retirement plan adviser can always invest in broad-based index mutual funds or diversified target-date funds. Tied to a saver’s projected retirement date, say 2060 or 2065, target-date funds have investment glidepaths that become more conservative over time by increasing exposure to the right mix of risk- and age-appropriate stocks and bonds.

3.) Create a Budget

Inflation, currently at 4.9%, but which hit a high of 9.1% last June, has woken many people up to the benefits of creating and sticking to a budget.

This exercise is especially beneficial for retirement savers.

Where to start?

“First, cut out unnecessary expenditures, such as ending subscriptions you’re not using,” says Ken Nuss, CEO of AnnuityAdvantage. “Small steps can add up to significant savings.”

Keeping track of your savings, organizing it into categories and seeing where you can cut back is another important step in creating an actionable budget plan.

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4.) Diversify Into Safe Havens

Retirement income is essential for those living on a fixed income, so now, more than ever, safe alternatives to stocks and bonds should be very appealing to older investors.

Consider “safe, income-paying instruments, especially those that offer tax advantages,” Nuss says. Treasuries are a good option now that interest rates are high, he says.

Another income source could be tax-deferred fixed-rate annuities. These can earn up to 5.4% on a three-year contract and 5.55% on a five-year contract, Nuss says.

If the annuity is owned outside of an IRA or retirement plan, “the payments you’ll receive are only partially taxable because much of the income is considered a nontaxable return of premium,” Nuss notes.

5.) Work Part-Time

Inflation has also prompted 39% of American workers to take on a side job, according to a Bankrate survey of 2,505 adults released Wednesday. A whopping 44% foresee keeping those side hustle jobs to maintain their lifestyle.

Many reports show that retirees and people planning for retirement are counting on working at least part-time in retirement—not just for the income but for the social connections and to keep their brain power active.

Additionally, “inflationary shock” has been driving more people age 55 and older, including retirees, back into the work force.

The bottom line is that while retirement may seem impossibly elusive, it doesn’t have to be. The key is to be proactive, form a constructive plan and remain positive.

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