This week the government issued its monthly inflation data report, and the headline could have put you to sleep: “Consumer Price Index Rises 0.2% in April.” It would have been easy to skip over this seemingly insignificant story for two reasons: First, the way the government reports inflation data, on a monthly basis, isn’t terribly meaningful. But more importantly, even if you looked at the annual rate — about 2.5 percent — inflation just doesn’t seem like much of a concern.

But, before dismissing the topic entirely, it’s important to keep in mind a key concept from behavioral finance: The Recency Bias. What this says is that our minds place disproportionate weight on whatever we have observed most recently, and we’re not very good at thinking in terms of long-term averages. In certain situations, this isn’t a problem. If a sports team has had a great year, they are more likely to keep winning. If it’s 70 degrees outside today, it’s likely to be approximately the same tomorrow. In those cases the most recent data can be a useful predictor of what comes next. But, when it comes to financial trends, including inflation, it can be misleading to focus only on recent experience.

I raise this topic because inflation could have a larger impact on your financial future than recent headlines suggest. Since 1990, the average annual inflation rate has been a relatively modest 2.5 percent. But, you don’t have to look too much further back to see that it wasn’t always this way. In the 1980s, inflation averaged about 5.5 percent, and in the 1970s it was nearly 8 percent, with some years topping 10 percent.

Why is inflation important to your financial plan? Suppose you are 40 years old and want to spend the equivalent of $100,000 per year when you retire at 65. At an inflation rate of 2.5 percent, you would need $185,000 per year to provide the equivalent of $100,000 today. But if, in the coming years, inflation rose back to its 50-year average of about 4 percent, you would need closer to $270,000 to provide that same spending power in retirement. Assuming a standard withdrawal rate of 5 percent, that could mean the difference between a savings goal of $3.7 million and $5.4 million.

If inflation is unpredictable but potentially so consequential, what should you do about it? I have three suggestions:

First, be sure your financial plan incorporates a range of outcomes. In the above example, there is a wide gap between $3.7 and $5.4 million, and it would be glib to say that you should just save as much as you can. Instead, I think it’s useful to consider the full range of potential outcomes, and to be prepared with a Plan B if inflation does turn out worse than expected.

Second, avoid leaving too much in cash. Even the most generous savings accounts these days are paying only 1.5 or 1.6 percent. So, with inflation at 2.5 percent, you are automatically losing ground. Of course, there are completely valid reasons to hold some amount of cash, but I would just caution against holding too much cash for too many years.

Third, be careful with fixed-rate bonds, which can lose value when inflation rises. I sometimes hear people refer to bonds as “safe,” but in an environment of rising inflation, bonds are hardly safe. While the stock market’s performance is mixed during periods of higher inflation, I think you’ll be much better off over time in stocks than in bonds. That’s because, when inflation rises, companies can raise prices, and ultimately that flows through to earnings and stock prices. Not every year, but on average, I’d be much more comfortable in stocks than in bonds.

Finally, beware of the myth that gold is an effective hedge against inflation. While it is true that there have been periods when both gold and inflation were rising at the same time, that is not always the case. According to one study, the long-term correlation is below 0.2 — in other words, very weak. As I said to one client this week, if you really want to invest in gold, buy jewelry. That way, at least you will get some utility out of it even if the price doesn’t go up.

To be clear, I am not predicting that inflation will rise. It may or it may not. I just want you to be prepared either way.