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How to Retire Now-ish: A Guide to Inflation, Rising Rates, and More

Strong markets have swelled account balances, but changing conditions make it a good time to revisit your plan.
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Illustration: Derek Zheng for Bloomberg Businessweek

After years of watching strong markets swell portfolios, many recent and would-be retirees are in a nice spot—on paper. But it may be an awkward and anxious moment emotionally. The assets that sent account balances to such heights—particularly a handful of big U.S. technology stocks—now look expensive by many measures and have been showing some weakness this year. At the same time, reducing your exposure to stocks feels dangerous with inflation running at the highest rate in decades, eating away the modest returns of more conservative investments. And with the rise in interest rates seen by many as just getting started, bond funds look vulnerable to losses.

“There is definitely a lot more strain now for retirees,” says Wade Pfau, a professor at the American College of Financial Services in King of Prussia, Pa., which trains financial planners and advisers. “We are outside of all the historical situations that we have been talking about for retirement.”