While the Federal Reserve is striving to get inflation back down to 2%, many in the financial world don't necessarily view that as likely.

Recently, the Chief Market Strategist at JP Morgan, the largest bank in the country, is instead
seeing a return to 1970s-style stagflation.

He's not alone. Jim Grant, Founder of Grant's Interest Rate Observer, also sees inflation sticking around.

He recently noted that the loss of purchasing power we as consumers have experienced is not likely to be reversed, with inflation instead lingering.

What does all this mean if you're planning your retirement?

The Inflationary Environment of the 1970s: A Case StudyThe U.S. has experienced several decades of low inflation, so we are less familiar with this financial phenomenon. However, high inflation is nothing new if you look back in history.

The 1970s were marked by economic turbulence as the world grappled with bouts of inflation interspersed with periods of slow growth - a peculiar situation coined as 'stagflation.'

Contrary to classic economic theories, stagflation paved new ground, creating overall miserable financial conditions for the better part of a decade. During this time, the Consumer Price Index peaked at almost 14%.

Of course, other factors were in play, including an oil price shock.

However, experts attribute the
primary cause of the 1970s high inflation to preceding easy money policies by the Federal Reserve.
[i]How did the markets fare? Traditional safe havens such as bonds experienced steep losses. Equity markets were also hard hit, with the S&P 500 index falling over 40% from its peak in 1974. Worse, the stock market stayed in a long, severe bear market, earning the nickname "lost decade."
What Does Continued Inflation or Stagflation Mean for Your Retirement Plan?While the 1970s was a unique time, even simple continued inflation can spell stress for today's and tomorrow's retirees.

That's because your expenses may increase while economic conditions pressure your investments.
That's where taking proactive action sooner rather than later can help.

With sound financial planning, you can help ensure you have enough income coming in month in and month out to pay the bills.

This way, you’re not forced to sell your investments when they are down.



One specific strategy that can often help is annuities.

Using these insurance products as part of a balanced retirement plan can help you stay diversified while ensuring you have enough income to cover basic expenses.

An annuity can be structured to provide a guaranteed income stream, so you’ll be better insulated from the ups and downs of your stocks and bonds.

Of course, always carefully weigh annuity costs to ensure the product is a fit for your needs.
Key TakeawayInflation can profoundly impact your financial stability.

At the same time, many retirement plans haven’t adequately prepared for today’s higher inflation rates.

Fortunately, annuities can be a powerful tool to help you avoid worrying about rising costs impacting your ability to pay the bills.

Ready to discover if an annuity is right for you?


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