This week I’m talking about inflation - are we in for higher inflation in the coming years? And if so, what does that mean for you and your retirement? 

Every year for the last 13 years that I’ve been an advisor, I’ve been hearing from clients, the media, and plenty of people I know that higher inflation is just around the corner. Yet, over the last 20+ years, inflation has remained remarkably low. 

But with the national debt climbing and trillions of dollars of fresh stimulus being pumped into the economy because of Covid, is higher inflation in the cards over the next several years? 

In June of this year, an interesting article came out in The Economist. The title of the article: “Don’t worry about inflation—yet”. 

I would tend to agree with this sentiment. It’s certainly possible in the near future, but unlikely as businesses (except for the ones selling hand sanitizer) are unlikely to have the power to increase their prices until the economy turns around. 

And once the Covid recession is behind us, and the economy begins growing again and wages grow at a sustainable rate, inflation becomes less of a concern because economic growth will be better able to support an increase in prices. 

It’s a delicate balance, but personally, I still have confidence in the Fed’s ability to manage inflation - and deflation for that matter, which is a much bigger potential problem today because of Covid. 

So should you worry about inflation right now? Probably not. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip.

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