Persistent inflation is making the already common fear of running out of money in retirement much more real. A recent study from Boston College revealed that inflation is putting "more retirees at risk of running out of money," as "rising prices require bigger withdrawals from retirement savings," said The Wall Street Journal.
This is likely to hit less wealthy retirees harder. "The study projects that inflation will reduce the financial wealth of retirees in the top third of the wealth distribution by an average of 4.3% by 2025," said the Journal, whereas "those in the bottom third, who rely more heavily on cash and bonds in their retirement savings, are likely to experience an 18.8% reduction by 2025 due to inflation."
While this can become an understandably stressful financial situation, there are steps you can take to better ensure your retirement funds see you through.
Reassess how much retirement income you really need
Whether you are still in the planning phase or have already retired, it is never too late to take a second look at your retirement budget (or make one, if you have not already). "Financial experts agree: There's no way to stretch money in retirement if you don’t know your income and expenses," said U.S. News & World Report.
Determine how much you actually need to withdraw each month to cover necessary expenses while keeping a lid on other spending, without draining your savings too quickly. Keep an eye out for any debt balances that start growing, as this is "a huge red flag," said SmartAsset, and "a sign that you need more money than you have and that debt service will only grow as you age."
If your debt is growing, figure out how you can adjust accordingly, whether by cutting back or finding an additional source of income.
Reinvest some of your funds
Even though "the rule of thumb is often to shift your assets to an 80/20 mix between safe investments, like bonds and growth investments, like an equity index fund" as you near retirement, what experts "do not recommend is that you take your money out of the market entirely," said SmartAsset.
If concerns about running low on money are cropping up, consider reinvesting some of your funds to try to capture potential returns. Just make sure to be measured about any risks you end up taking — otherwise, you could end up in an even worse situation.
For instance, you might tie "essential living expenses" to "'guaranteed income sources, such as Social Security, pensions, and annuities," while "for more discretionary expenses, such as travel and entertainment, you can withdraw from money you're willing to take more risk with," Clay Hessel, the vice president of wealth management at Alera Wealth Services, said to CNBC Make It.