facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast phone blog search brokercheck brokercheck Play Pause
Should You Be Worried About Stagflation in Retirement? Thumbnail

Should You Be Worried About Stagflation in Retirement?

According to a recent poll by CNN, one third of Americans believe that the economy is the most pressing issue facing the country right now. That's not surprising as rising prices continue to hurt folks from the gas pumps to the grocery store and everywhere in between.

But could those rising prices be steering us towards stagflation? Many retirees are asking that question and worrying that their fixed incomes might struggle to keep pace with this challenging economic environment.

I don't believe that stagflation is an imminent concern right now. But I thought it might be helpful to draw some distinctions between stagflation and inflation and discuss some strategies for maintaining your standard of living throughout retirement.


Inflation is a decrease in purchasing power due to the rising costs of goods and services. An easy way to keep tabs on inflation is the consumer price index (CPI), which is released every month by the U.S. Bureau of Labor Statistics. Currently, the CPI is up 5.4% over the last 12 months.

So that's the glass-half-empty view of inflation: prices go up, and folks have a harder time buying things.

The glass-half-full perspective is that rising prices reflect a healthy economy that's continuing to expand. That growth is typically good for corporate earnings, which is usually good for Wall Street.

Of course, that's not very comforting for folks on Main Street who have been struggling to make ends meet. But as we've discussed on some recent podcasts and blogs, our hope is that many of the constraints that are driving inflation right now will start to ease in 2022. The news that younger children are eligible for vaccines could continue to drive down COVID-19 cases. Lower COVID-19 numbers will hopefully speed up businesses around the globe and work some kinks out of the supply chain. After the holiday shopping season, some consumer demand that's been pent-up since lockdowns could start to subside as well. And whatever your opinions on government spending may be, now that we're nearing the end of the debate on President Biden's infrastructure initiatives, we won't have as much lingering uncertainty about how much we're spending and on what.   


Inflation is one of the symptoms of stagflation, which many retirees lived through during the 1970s and early 80s. But by the early 1980s, the rate of inflation neared 15%. As tough as things are for some folks right now, I haven't seen any indication that we're in danger of hitting double-digit inflation numbers today.

Another symptom of stagflation is "stagnant" economic growth. As I write this, the Dow Jones Industrial Average is over 36,000. COVID-19 and its associated supply chain issues stalled some of the growth we were hoping to see last summer, but our economy still grew 2% in the third quarter.

The final symptom of stagflation is high unemployment. According to the latest data from the U.S. Bureau of Labor Statistics, unemployment is down to 4.6% and the economy added 531,000 jobs in October*. The most pressing labor issue right now isn't unemployment, it's "The Great Resignation." Millions of workers who were displaced during the pandemic are either continuing to stay home or leaving their old jobs as they realign their priorities, health care needs, and professional goals.

Your financial plan

That's 0-3 on the stagflation checklist. So why are you reading so much about stagflation on social media and seeing so many stories about it on cable news?

Because "stagflation" sounds scarier than "inflation," especially if you remember the 1970s. The media loves to scare up as many clicks and viewers as it can. Unfortunately, far too many people let those scary headlines lead them to potentially disastrous financial decisions.

In any economic environment, coping with inflation during retirement should always be a part of a comprehensive financial plan. One strategy we use at Keen Wealth is to help clients prepare a bucket of reserves that can cover several years of expenses in the event that the stock market corrects. We also account for how Social Security payments will rise with inflation when we're picking the best time to start taking those benefits. And we look for advantageous moves to a client’s portfolio into various asset classes that we expect to help during an inflationary environment.

But the strongest safeguard against inflation is to filter out the noise and stick with the investment strategy you've worked out with your fiduciary advisor. With interest rates as low as they are, locking up too much of your cash in a savings account isn't going to help you keep pace with inflation. History tells us that folks who weather short-term market volatility and keep their focus on the big picture have an opportunity to build meaningful wealth and secure their ideal retirement.

For more information, we have some good resources on inflation and stagflation at KeenWealthAdvisors.com. We’d also be happy to answer questions you have on these and any other topics at your year-end financial review meeting. Call up Keen Wealth and let’s get something on the books.

*Total nonfarm payroll employment.

About Bill

Bill Keen is a CHARTERED RETIREMENT PLANNING COUNSELOR℠ and independent financial advisor with more than 25 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he specializes in providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.

KWMG, LLC’s dba Keen Wealth Advisors (“company”) is an SEC Registered Investment Advisor located in Overland Park, KS. The company and its representatives may only conduct business in those states where registered or where excluded/exempt or from licensure. For registration information please contact the SEC or the state securities regulators for the states where the company is notice filed. A copy of the company ADV is available upon request. Advisory services are only offered to clients or prospective clients where the company and its representatives are properly licensed or exempt from licensure. No advice may be rendered by the company unless a client service agreement is in place. This information is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy and is for illustrative purposes only. Clients and prospective clients must consider all relevant risk factors involved with each strategy, including costs or fees, and their own personal financial situations before trading.

The views outlined in the book, Keen on Retirement Engineering the Second Half of Your Life, are those of the author and should not be construed as individualized or personalized investment advice. Any economic and/or performance information cited is historical and not indicative of future results. Economic forecasts set forth may not develop as predicted.

The Amazon Best Seller ranking listed on marketing materials is specifically referring to Best Seller rankings for the Kindle Top 100 Paid Lists under the subcategories of: Budgeting and Financial Risk Management, based on data as of September 5, 2019. Amazon rankings although relevant on how a product is selling overall doesn’t necessarily indicate how well an item is selling among other similar items or similar item categories. Amazon may choose the most popular categories or subcategories within which an item has a high ranking to determine its best seller rankings. These rankings are updated hourly and as a result, should be expected to fluctuate as such. Keen Wealth Advisors and Amazon are not affiliated entities. 

The Steve Sanduski Advisor Network, Belay Advisor, LLC and other third-party contributors to our blogs and podcasts are not affiliated with Keen Wealth Advisors. 

For additional details on Keen Wealth Advisors, please visit https://www.keenwealthadvisors.com/important-disclosures.


Schedule a Complimentary 15 Minute Strategy Call

Schedule a Time