How Retirement Planning Can Adapt to Inflation and Rising Costs

Your retirement savings are shrinking while you sleep.

Not because of bad investments.
Not because of market crashes.

But because of something far more unforgiving: inflation.

Here’s a truth many retirement plans fail to address directly. Much of traditional retirement planning was built for a different era. An era of more stable prices, predictable costs, and long careers with fewer variables.

That world has changed.

Inflation reached a 40-year high of 9.1% in June 2022 and has since cooled to around 2.6% by late 2024. While inflation levels fluctuate, the long-term impact compounds over time. For corporate executives with complex compensation and higher ongoing expenses, inflation can quietly reshape retirement outcomes.

The real question is whether your retirement plan is built to adapt.

The Math Most People Underestimate

Most people think about inflation in annual terms.
What matters more is the cumulative loss of purchasing power over decades.

Let’s look at a realistic example.

If you need $180,000 per year to maintain your lifestyle today, here’s what that same lifestyle may cost in the future, assuming 3 percent inflation:

• In 20 years: approximately $325,000 per year
• In 30 years: approximately $437,000 per year

Your expenses could more than double simply to maintain the same standard of living.

And this assumes average inflation. Healthcare costs have historically risen faster than general inflation. According to Fidelity’s 2025 Retiree Health Care Cost Estimate, a 65-year-old couple may need $315,000 in after-tax savings dedicated specifically to healthcare expenses in retirement.
https://www.fidelity.com/viewpoints/personal-finance/retirement-health-care-costs

That is a separate planning consideration.
On top of everyday living costs.

This is why retirement planning that treats inflation as a secondary assumption often falls short.

The Limits of Social Security Adjustments

Social Security includes cost-of-living adjustments, but those increases often lag behind real-world expenses.

Between 2010 and 2024, Social Security benefits lost roughly 20 percent of their buying power, according to The Senior Citizens League. Retirees tend to spend more on healthcare, housing, and insurance, which often rise faster than the inflation measures used to calculate COLAs.
https://www.seniorsleague.org/social-security-cola/

Social Security can play a role in retirement income, but it should not be relied upon as full inflation protection.

Why Static Withdrawal Rules Fall Short

For decades, many retirement plans relied on the 4 percent rule. Withdraw a fixed percentage annually, adjust for inflation, and expect assets to last 30 years.

That framework was built using historical data that did not fully account for:

• Extended periods of elevated inflation
• Rising healthcare expenses
• Longer life expectancies
• The complexity of executive compensation and tax exposure

Static withdrawal strategies can become stressed when inflation rises or markets decline early in retirement.

Adaptive Retirement Strategies

Modern retirement planning focuses less on rigid rules and more on flexibility.

Guardrails-Based Withdrawal Planning

Instead of fixed percentages, guardrails approaches adjust withdrawals based on portfolio performance and inflation trends. Spending can increase during strong periods and tighten during weaker ones, helping manage long-term sustainability.

Variable Spending Frameworks

Not all expenses carry equal importance. Separating essential spending from discretionary spending allows retirees to adjust selectively when inflation impacts certain categories more than others.

Tax-Aware Distribution Sequencing

Inflation can push retirees into higher tax brackets over time. Coordinating withdrawals across taxable, tax-deferred, and tax-free accounts helps reduce the combined impact of rising costs and taxes.

The Executive Compensation Challenge

Corporate executives often face planning issues that generic retirement models do not address:

• Stock options and RSUs with complex vesting and tax implications
• Concentration risk from company stock holdings
• Deferred compensation elections made years before retirement
• Timing decisions that affect both income and tax exposure

The transition from accumulation to distribution is especially important. Poor sequencing decisions can increase taxes and amplify inflation’s impact over time.

Roth Conversions in the Early Years of Retirement

Roth conversions can be especially effective after retirement but before Required Minimum Distributions begin at age 73.

Many high-income professionals enter retirement with substantial after-tax savings, allowing them to fund early retirement spending without drawing heavily from tax-deferred accounts. During this window, taxable income may be lower, creating opportunities to convert portions of traditional retirement accounts to Roth IRAs at more favorable tax rates.

Potential benefits include:

• Reducing future Required Minimum Distributions
• Creating tax-free income flexibility later in retirement
• Managing long-term tax exposure as inflation increases nominal income

This strategy is not appropriate for everyone, but when coordinated carefully, it can improve long-term outcomes.

Managing Behavior During Inflation

Inflation adds emotional pressure. Rising costs can prompt reactive decisions such as chasing returns or altering portfolios at the wrong time.

The evidence on market timing is clear. One study found that professional market forecasters were accurate only 47 percent of the time, worse than random chance.

Effective inflation management relies on discipline:

• Evidence-based investing
• Broad diversification
• Low-cost investment vehicles
• Regular rebalancing

These approaches are not dramatic, but they have proven durable across economic cycles.

Choosing the Right Retirement Advisor

Not all retirement planners approach inflation with the same rigor. When evaluating a retirement advisor, consider asking:

• Do they understand executive compensation and equity-based income?
• Are they a fiduciary with a legal obligation to act in your best interest?
• Do they model retirement outcomes under multiple inflation scenarios?
• Is their fee structure transparent and fully disclosed?

The Bottom Line

Inflation is not temporary. It is a permanent planning variable.

Retirement plans that assume stability risk falling behind. Adaptive retirement planning acknowledges change and builds flexibility into income, taxes, and spending.

Traditional retirement planning assumed a predictable world. Modern retirement planning prepares for uncertainty.

Ready to Build an Inflation-Resilient Retirement Strategy?

At Daner Wealth Management in Alpharetta, GA, we specialize in retirement planning for corporate executives and high-net-worth professionals. With more than 30 years of experience navigating multiple economic cycles, we help clients build retirement plans designed to adapt over time.

If you are searching for a retirement advisor near Alpharetta, including Roswell, Milton, Johns Creek, and Sandy Springs, contact Marc Daner, CFP®, ChFC® for a personalized consultation.

Call (770) 368-6033 or email marc@danerwealth.com to schedule a conversation.

Daner Wealth Management’s fee structure ranges from 0.75 percent to 1.25 percent of assets under management annually, with full transparency and disclosures available in our Form ADV.

_________________________________

About Marc Daner

Marc Daner, CFP™, ChFC®, founded Daner Wealth Management, a Registered Investment Advisor serving Alpharetta, GA. With over 30 years of experience as a retirement financial planner, Marc specializes in comprehensive retirement planning for corporate executives and high-net-worth professionals. As a fiduciary advisor, he is committed to evidence-based strategies and client-focused planning.

_________________________________

Disclosures

Investing involves risk, including possible loss of principal. Diversification does not guarantee a profit or protect against loss. Examples and projections are hypothetical and for illustrative purposes only.

This content is for informational purposes only and does not constitute individualized investment, tax, or legal advice. Consult your tax or legal professional regarding your specific situation.

All conflicts of interest are disclosed in our Form ADV, available upon request.