After more than a decade of hovering at normal-to-below-average levels, inflation became a hot topic again in 2021 when it rose to over 4%. By March 2022, it had hit a 40-year high of 8.5%. This prompted the Federal Reserve to take its usual course of action to combat inflation: raising short-term interest rates. Over the next 18 months, the Fed hiked rates at a historically aggressive pace. As usual, this created extreme volatility in the financial markets, but ultimately inflation did come down again to just over 3% by late 2023.
Nobody likes rising prices, but one positive outcome of the recent inflation spike is that it has prompted more people to think about inflation as it relates to their retirement goals. According to a recent survey by Global Atlantic Financial Group, 71% of Americans aged 59 to 75 said they believe rising inflation will negatively affect their retirement savings, while 46% said they believe inflation will make it more difficult to have a steady income in retirement. 1
