Inflation hits 40-year high

WF financial planner weighs in on how to take advantage of hike.
Published: Jan. 12, 2022 at 6:37 PM CST
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WICHITA FALLS, Texas (KAUZ) - In 1982, Wichita Falls based financial planner Gary Silverman was fresh out of the Navy and eager to jump into the favorable job market.

“It was a fun time, but it’s a very different inflation environment than it is now,” Silverman said. “Wages were increasing rapidly and that was part of inflation. I was seeing pretty significant pay raises every year.”

Nearly 40 years later, history is now repeating itself as inflation jumped to 7% in 2021, the highest increase since ‘82.

But, as folks in Texoma see the large jump and plan for the future, take a page out of Silverman’s book and realize it’s not all bad.

“Wage inflation tends to be very sticky,” Silverman said. “While the price of a car or camera can go up and down rapidly, once you give somebody a raise, taking it away, because things don’t cost as much, can be very hard.”

Silverman added that right now is a great time to “recreate” your career, especially if you’re a young person. On the other hand, those who are retired or rely on a fixed income stream should be cautious.

“While interest rates are going up, it’s not like they’re high,” Silverman said. “Getting 2% interest from a bank is a hard thing to do often and imagine if you’ve seen inflation go up 7%. There’s a huge mismatch there and every year you’re losing purchasing power.”

So, while times may favor the young job hunter, there are ways to take advantage of inflation such investing in things with a fixed interest rate. These include certain bonds, raw materials or in some cases, your mortgage.

“And that’s going to depend on how you see this inflation as far as whether you can live through it easily or if it’s going to be very detrimental to you,” Silverman said.

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