When History Rhymes
BY: ETHAN LOHR, CFP® — November 13, 2025
Did you know I actually have a degree in history? Before I ever went the financial planner and CFP® track, history was what I studied in college. Funny enough, it turns out to be incredibly relevant to portfolio management. Why? Because financial markets have a way of rhyming with the past.
And right now, what’s happening in portfolios today looks strikingly similar to what we saw back in the 1970s.
When the Dollar Broke Free
In 1971, the U.S. dollar was officially delinked from gold reserves. Up to that point, currencies around the world were tied to the U.S. dollar, and the U.S. dollar itself was pegged to gold at $35 an ounce. When President Nixon suspended that convertibility, it meant money was no longer tied to gold.
In plain English? We gave ourselves permission to print more dollars. The tradeoff was greater flexibility for policymakers — but also much higher inflation.
And investors responded. Take a look at the chart: equity allocations spiked compared to bonds, peaking at nearly a 7-to-1 ratio. Why? Because inflation is a bond-killer. When prices are rising fast, fixed payments from bonds get eaten alive. Investors turned instead to equities, which at least have the chance to keep up with inflation through growth.
A New Kind of De-Linking
Fast forward to today, and we’re seeing a different kind of de-linking. Beginning in the 90's the Federal Reserve put a focus on price stability and in 2012 officially defined their policy at a 2% inflation target. If inflation was higher than desired, they raised rates. If inflation was low, they cut rates. Simple compass, easy to follow.
But over the last several years, inflation has proven stubborn. Even as the Fed hiked rates, inflation refused to come back neatly to 2%. And now, with the labor market showing cracks, the Fed has pivoted. They’re cutting rates — even though inflation is still above target.
What does that mean? In effect, they’re saying: “We’d rather live with higher inflation than risk a weak job market continuing to erode."
Sound familiar? Back in the 70s, policymakers said: “We’d rather live with higher inflation than tie our hands to gold reserves.” Different era, same story: inflation gets tolerated for the sake of other goals.
How Retirees Respond
Here’s where this hits home for retirees. Faced with inflation, retirees essentially have two choices:
Lean more into equities. This keeps up purchasing power, but adds volatility.
Stick with bonds. This keeps things steady, but risks lagging inflation.
Many retirees, seeing the writing on the wall, tilt toward equities. And technically, that’s the “right” long-term move. But here’s the catch: the volatility rattles nerves. Portfolios may look great on paper, but retirees often respond by cutting back on withdrawals — the very income they need to enjoy retirement.
So you end up with a retiree whose balance sheet looks healthy, but whose cash flow stinks. It’s like owning a shiny RV, but being too nervous to take it on the road.
The Seatbelt Solution
This is exactly where the Four Buckets Retirement Income Strategy® comes in. Retirees don’t have to choose between good long-term positioning and reliable everyday income. The Buckets framework lets them do both:
Bucket 1 (Cash Reserves): Accounts to pay the bills and a little extra for the occasional purchase or repair.
Bucket 2 (Earned Income): Sources like Social Security and pensions form the first layer of lifetime income.
Bucket 3 (Secure Income): Retirement savings structured with lifetime income guarantees. This is the seatbelt — the bucket that provides the confidence retirees need to spend in a healthy way. (See Chapter 9 of The Four Buckets for two different approaches to how this is done.)
Bucket 4 (Growth& Legacy): Equities for long-term inflation protection and eventual legacy.
The seatbelt matters because it keeps retirees steady while markets move. With guaranteed income woven into their savings, retirees can both respond wisely to inflation by holding equities and continue enjoying reliable income to fund their lifestyle.
Looking Forward
History doesn’t repeat, but it sure does rhyme. The 1970s showed us how inflation can reshape portfolios — and we’re hearing those echoes again today. The difference is that today’s retirees often have less margin for error, since fewer can lean on traditional pensions as a safety net. That reality helps explain the cautious spending behavior we see now.
The good news is retirees don’t have to choose between smart portfolio positioning and steady retirement income. With the right structure — and the right seatbelt — you can pursue growth and keep your income flowing. Because retirement isn’t meant to be lived in spreadsheets and charts; it’s meant to be lived in the experiences you’ve worked so hard to enjoy.
P.S. A Note for Non-Retirees
If you’re not yet retired, chances are your portfolio is already heavily tilted toward equities — often 90% or more — and that’s usually right where it should be. Stay the course. But here’s the caution: don’t let greed creep in with money you’ll need soon. Funds earmarked for shorter-term goals (in the next 1–3 years) generally don’t belong in the stock market. Keep that money safe and accessible, so you’re not forced into bad timing decisions or have to put things on hold because your portfolio hit a speed bump.
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