Soaring inflation is a ‘warning signal’, professor says

CHAMPAIGN, Ill. (WCIA) — After years of low inflation rates, inflation has hit a 40-year high in the United States.

“For a lot of people, this has been a wake-up call that they may want to re-evaluate some of their investments,” said University of Illinois law professor Richard Kaplan.

He said the future of inflation is unpredictable, but people should make long-term financial plans.

In May, prices jumped 8.6% from 2021. The Department of Labor reports that this is the highest spike since 1981. Kaplan said consumers may have been shocked by the inflation spikes back then, but that didn’t seem as unusual as it does today. This is why people – especially those who are retired – may want to change their investment portfolios.

Kaplan said keeping some of your assets in cash is one safety net, and waiting past full retirement age to claim Social Security is another. Ultimately, he said the most important thing was to “plan ahead.”

“It’s also a good idea when anticipating retirement income streams to take the idea of ​​when to start taking Social Security very carefully, realizing that as the most important source of income that will try to match inflation, even then the inflation index is not perfect,” Kaplan said.

He said most people have the majority of their assets tied to their home, if they own one. If these houses are paid off, they have largely insulated themselves against inflation. But, there’s a lot to consider in today’s economy, and nothing is guaranteed.

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