Plus, here’s how retirees can smartly deal with the secondary impacts of inflation.

For retirees, inflation can hit especially hard thanks to three factors that interact with these rising costs: increased withdrawals, taxes and how those parlay into depleting savings, says Jay Sharifi, CEO of Legacy Wealth Management. Indeed, inflation can trigger a chain reaction, as it can necessitate larger withdrawals so retirees can afford their life. Those withdrawals then inadvertently create larger tax bills — and that may in turn require additional withdrawals, leading to a vicious cycle that can deplete one’s savings more quickly, he explains.

Sharifi calls this the “triple threat” that is reshaping retirement planning. “The first thing we need to consider is the weight of all three of these on the middle class and understanding the burden of taking care of the next two to three decades in retirement, which can potentially be the most expensive phase of retirement,” says Sharifi. For many, this might mean consulting a financial adviser. To find one, you can use this free tool that can match you to a fiduciary adviser, from our ad partner SmartAsset, as well as resources like NAPFA and the CFP Board.

Other pros also explain just how much inflation is impacting their clients. “Many middle-income Americans feel increasingly unprepared for a future shaped by persistent inflation, ongoing economic volatility and growing doubts about the long-term stability of key federal safety nets,” says Scott Goldberg, president of the consumer division of financial services company CNO Financial Group. “These concerns are practical, emotional and increasingly central to how people are thinking about their financial lives. Even in a cautious economy, it’s shaping how people plan, save and make decisions about their future,” he says.

While you probably can’t avoid inflation, we asked pros some strategies that retirees can do to help mitigate its impact.

Lowering your taxes as you fight inflation

Increased withdrawals may be necessary in times of inflation — so what do you do to try to avoid a heftier tax bill because of it? Since future Roth withdrawals are tax-free, converting traditional IRAs or 401(k)s to a Roth account can help lower your tax burden, in addition to reducing required minimum distributions. Doing Roth conversions before RMDs kick in helps create future withdrawals that are tax-free.

Considering which accounts to withdraw from and in what order will also play an impactful role in how you’re taxed. One strategy is to pull money from taxable accounts, like brokerage accounts first, followed by traditional IRAs and 401(k)s, before doing so from Roth accounts to preserve the tax-free funds for as long as possible.

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