Undoubtedly, all investors must adapt their portfolios in light of the current era-defining transition in the financial climate from low-rate, stable inflation conditions to a period of tighter monetary policy, higher consumer prices and rising market uncertainty.

Whatever the ultimate pace of interest rate increases, the inevitable trend upwards will have profound consequences for investors in a financial regime change that has not been seen for over 40 years.

People in retirement, in particular, face tough choices as increasing market volatility batters the risk assets where many have sought shelter during the long era of sinking interest rates.

Lifted for years on the rising tide of equity bull markets, retirement portfolios will need different ballast and stronger anchor lines as the tidal force of financial markets changes course.

The impact of inflation

Source: Allianz Retire+, March 2022. For illustrative purposes only. Assumes a fixed rate of inflation applied to the withdrawal amount for the entire investment period. Fixed rate of investment return for the entire investment period. Not reflective of historical or expected capital market outcomes.

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