Most Americans worry about the risks of high inflation or a possible recession impacting retirement income, according to results of a survey from Alliance for Lifetime Income and CANNEX. This anxiety is manifesting in real-world behavior.
Per the third Protected Retirement Income and Planning Study, 81% of consumers between the ages of 45 to 75 are worried about inflation reducing spending power in retirement, while 79% fear a recession will drive the economy down and adversely affect retirement income. As a result, 60% of consumers reported reducing their spending because of inflation.
The corollary study of financial professionals revealed that registered investment advisors and broker-dealers are even more concerned than consumers about inflation, market volatility, and chances of a recession. Their concerns include:
- Increasing inflation reducing retirees spending power (92% vs. 81% of consumers)
- Stock and bond market trends reducing retirees’ potential retirement income (87% vs. 68% of consumers)
- Recession driving the economy down and impacting retirement income (84% vs. 79% of consumers)
“The chasm between consumers and financial professionals when it comes to protecting and spending money in retirement continues to confound in this latest survey,” said Jean Statler, CEO of the Alliance for Lifetime Income, in a news release. "Against the backdrop of record inflation, a bear market, and global economic uncertainty, the misalignment in what financial professionals are relying on to create retirement income, and what clients are looking for, is a problem.”
Statler added that 92% of financial professionals surveyed “are worried about inflation reducing client spending power, and so it’s good that many of them have changed their retirement planning approach this past year. But for those financial professionals who tell their clients to simply ride out the risks and are not considering protected income options like annuities, don’t be surprised if you find them going elsewhere for advice."
Nearly four out of five financial professionals (78%) have changed their approach to retirement planning in the last year. This significant shift is largely in response to inflation — cited by 82% as a factor in the decision to make a change, compared to roughly half who cited other top factors, including bond returns (52%) and interest rates (48%).
“Last year’s study saw nearly two-thirds of financial professionals (65%) changing their approach to retirement planning,” added Gary Baker, president of CANNEX USA. “Fast forward to today and we see that this trend has accelerated, with a third of financial professionals more likely to recommend an annuity due to the current climate of rising interest rates, inflation, and growing anxiety. Our data shows that clients are searching for an alternative to traditional asset allocation strategies, and we’re encouraged to see advisors responding to that demand.”
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