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Cutting Through the Noise
If you’ve been watching financial headlines lately, you’ve probably noticed the same themes popping up: inflation, predictions about a looming recession, and shiny new products being marketed as “inflation-proof investments.”
For many people between the ages of 45 and 65—those in the home stretch before retirement—this constant stream of news can feel overwhelming. You’ve worked hard to build your savings, and you want to protect it. The last thing you need is more uncertainty.
Here’s one observation I’ve seen over and over in my decades as a financial advisor: people react to scary headlines, and the reaction can often be more damaging than the event itself. The financial industry knows this, and that’s why it keeps creating products designed to profit from fear. But as tempting as they sound, these products rarely deliver on their promises.
So, instead of chasing the latest “inflation-proof” fund or trying to predict exactly when the next recession will hit, let’s step back. Let’s look at why these fads often disappoint, why trying to time the market is nearly impossible, and—most importantly—what actually works when you’re planning for retirement.
The Allure of Inflation-Proof Investments
Whenever there’s widespread anxiety, Wall Street springs into action. And right now, inflation is the hot button issue. That’s why we’ve seen a flood of new funds and ETFs marketed as “inflation protection.” The language they use—words like “safe,” “shielded,” and “protected”—isn’t accidental. It’s carefully chosen to appeal to nervous investors.
This isn’t the first time fear has been packaged and sold. Back in the early 2000s, mortgage-backed securities were pitched as virtually risk-free. They were built on the idea that housing prices always went up. For a while, they looked like a goldmine. We all know how that story ended.
The same playbook is being used today. A concern arises—inflation, for example—and new investment products appear overnight, promising safety. But the reality is often very different.
Take one high-profile inflation-protected fund that made headlines in 2024. It was marketed as a safe harbor during inflation. Yet by the end of the year, it was down 12%, even though inflation was still running hot. The problem is that these products often rely on complex strategies involving derivatives and swaps. They sound good in marketing materials but don’t always work in real life.
Here’s my rule: if you can’t explain in plain English how an investment works, you probably shouldn’t own it. That doesn’t mean all new products are bad, but most of the time, your retirement plan doesn’t need them. A solid, diversified strategy should already account for inflation and market swings.
Why Holding Cash Isn’t the Safe Bet It Seems
When people worry about markets or inflation, many retreat to cash. At first glance, this makes sense. Cash feels safe. It doesn’t bounce around the way stocks do, and you always know the exact balance in your account.
But safety is an illusion here. The reality is that cash steadily loses value when inflation is high. Imagine putting $100,000 in a savings account earning next to nothing. With inflation running at 3% per year, that money loses $3,000 in purchasing power annually. Over 10 years, your nest egg would buy about 25% less.
This “silent loss” is something most people overlook. You may feel secure when you see that balance sitting still, but in reality, inflation is quietly eating away at it.
Contrast that with the long-term performance of stocks. Since 1928, the S&P 500 has returned an average of about 9.8% annually. Inflation during that same time has averaged 3.2%. That 6.6% spread matters. Compounded over decades, it’s the difference between struggling to maintain your lifestyle and having your wealth grow significantly.
Now, does this mean you should put everything into stocks? Absolutely not. That’s where diversification comes in.
The Power of Diversification
Think of your retirement portfolio like a house. Stocks are the foundation—they provide the growth needed to outpace inflation over the long haul. But no one lives in a house with just a foundation. You also need walls and a roof.
That’s where bonds, real estate, and other assets come into play. Bonds provide stability and add diversification while investments like real estate can add some inflation protection. Alternatives like commodities or private assets can sometimes add a buffer against volatility.
Each piece plays a role, and together, they create a structure strong enough to withstand storms. A portfolio that leans too heavily on any one piece is fragile. A diversified portfolio is resilient.
I once had a client—to protect his anonymity, we’ll call him Dave—who wanted to move most of his retirement account into cash because he was convinced inflation would crush the markets. We stress-tested his plan. What we showed him was eye-opening: by going heavy into cash, his retirement savings would actually shrink in real value over time, leaving him with considerably less money to spend later in life.
Once he saw how stocks and bonds together historically performed even during inflationary periods, he chose a balanced portfolio instead. Fast forward a few years, and while cash savers have seen their purchasing power erode, Dave’s portfolio has continued to grow. That’s the difference diversification makes.
The Recession That Never Came
For years now, experts have been predicting a recession “any day now.” And yet, here we are in 2025, and the economy hasn’t followed the script.
So, what exactly is a recession? Technically, it’s two consecutive quarters of negative GDP. The average one lasts about 11 months. By the time it’s officially declared, it’s usually already halfway over. That means waiting to invest until after the recession is often a losing strategy.
This cycle has been particularly unusual. Despite aggressive interest rate hikes, both consumers and corporations are sitting on unusually large cash reserves. That cushion has allowed people to keep spending and businesses to keep investing, even as borrowing costs rose. The economy hasn’t slowed down in the textbook way that economists expected.
That’s why the long-anticipated “big downturn” still hasn’t arrived.
The lesson here is clear: timing the market doesn’t work. Even professionals can’t consistently predict recessions. And history shows that missing just a few of the market’s best days can devastate long-term returns. The catch? Those best days often happen right after the worst ones. If you’re sitting on the sidelines waiting for clarity, you almost always miss them.
What Really Works in Retirement Planning
So if chasing inflation-proof products isn’t the answer, and trying to time a recession doesn’t work, what does?
The truth is that retirement success comes from sticking to timeless principles, not chasing headlines. It means avoiding the “product of the day” and instead focusing on steady, proven practices. Things like:
- Dollar-cost averaging, which smooths out the ups and downs by investing regularly over time.
- Automatic contributions, which keep you disciplined and remove the temptation to time the market.
- Regular rebalancing, which ensures your portfolio stays aligned with your risk tolerance and goals.
It also means understanding what you own. You don’t need to know every technical detail, but you should know the basics. What is this investment? Why is it here? How does it help me reach my goals?
That understanding builds confidence. When markets dip, instead of panicking, you’ll recognize it as part of the process. Your portfolio was built to weather storms, and knowing that makes it easier to stay the course.
Practical Steps to Take Right Now
If you’re between 45 and 65 and preparing for retirement, here are some concrete steps you can take today:
- Review your retirement plan with inflation in mind. Does it already account for rising costs over the next 20 or 30 years?
- Ask your advisor to stress test your portfolio. What happens if inflation stays high? What if the market drops 20%? Knowing the answers gives you confidence.
- Resist emotional decisions. Headlines are designed to grab attention, not guide your retirement.
- Recommit to your long-term goals. Think beyond this year or next. Focus on the retirement lifestyle you want decades from now.
- Diversify your income streams. Along with growth assets, consider adding dividend-paying stocks, bonds, or even possibly annuities that provide predictable retirement income.
These steps keep you grounded and focused on what matters most: creating a retirement plan that works in all conditions, not just the ones making headlines.
Conclusion: A Steady Path Forward
Fear is nothing new in the investing world. In the ’90s it was the dot-com bubble. In the 2000s it was housing. Today, it’s inflation. Tomorrow it will be something else.
But through all of it, the fundamentals haven’t changed. Diversification, discipline, and time in the market are still the keys to success.
Your retirement won’t be decided by the next economic headline. It will be decided by the strategy you build and the discipline you stick to. That’s what brings true financial security.
So don’t get distracted by the promises of inflation-proof funds or the endless chatter about recessions. Build a plan that works no matter what the economy throws at you. That’s how you retire with confidence.
Because at the end of the day, the best investment isn’t the one marketed as “safe” today—it’s the one that helps you thrive tomorrow.
