Consumers and financial professionals are worried about the impact that inflation, market trends and a possible recession will have on spending power in retirement, according to the results of a new survey.
In fact, the Protected Retirement Income and Planning Study by CANNEX and the Alliance for Lifetime Income reveals that registered investment advisors and broker-dealers appear to be even more concerned than consumers. The study finds that 92% of financial professionals are worried about inflation reducing their clients’ spending power in retirement. Moreover, 79% have changed their approach to retirement planning this year, up from 65% who said the same last year.
Similarly, as high inflation persists into the second half of the year, among Americans ages 45 to 75 cite inflation (81%) and recession anxieties (79%) as their top retirement income concerns and are searching for an alternative to traditional asset allocation strategies. That anxiety is also showing up in real-world behavior, as 60% of consumers reported reducing their spending because of inflation, followed by finding ways to increase their income at 32%.
The third installment of the study is a survey of both individuals and financial professionals, designed to better understand their concerns in the current market environment and forecast retirement income trends.
Additional findings show that financial professionals are more concerned about:
the impact of stock and bond market trends reducing retirees’ potential retirement income (87% versus 68% of consumers); and
the possibility of a recession driving the economy down and affecting retirement income (84% versus 79% of consumers).
In contrast, consumers are slightly more concerned than financial professionals about worsening inflation reducing their ability (or their client’s ability) to contribute to retirement savings (70% of consumers versus 64% of financial professionals).
The study further shows that the shift in financial professionals changing their approach to retirement planning in the last year is largely in response to inflation—cited by 82% as a factor in the decision to make a change, compared with roughly half who cited other top factors, including bond returns (52%), interest rates (48%) and pandemic forces (34%).
“The chasm between consumers and financial professionals when it comes to protecting and spending money in retirement continues to confound in this latest survey,” says Jean Statler, CEO of the Alliance for Lifetime Income. “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 adds that with 92% of financial professionals worried about inflation reducing client spending power, 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,” she warns.
The survey was conducted online by Artemis Strategy Group in April and May 2022 among 2,025 American consumers ages 45 to 75, and 514 financial professionals who conduct retirement planning for individual clients.
