Understand the historical context of stagflation and its potential impact on today’s retirees. Explore the importance of proactive financial planning and strategic investment choices to mitigate risk.
by David Marra
The Street
It’s a term we’re hearing more and more these days, yet something that hasn’t been a feature of the U.S. economy in fifty years, since the 1970s: stagflation. Unfortunately, a whiff of stagflation is in the air again and those nearing retirement and in retirement should pay attention.
Many of today’s retirees will remember that economically painful decade. For those who either weren’t alive yet, were too young to remember or for those who need a refresher (pretty much everyone), it’s worth devoting some time to understanding what stagflation is and what it means for investors.
The word stagflation comes from combining the words “stagnation” and “inflation.” All of us have become familiar with inflation from the experience of the past few years – a sustained increase in the general price level of goods and services in an economy. Generally, when inflation is high it is because the economy is overheated relative to its capacity. That is why inflation is most often associated with a robust, growing economy, like we’ve had the past few years.