Americans cite inflation, recession as top retirement income concerns

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As high inflation persists into the second half of the year, about 80% of Americans between 45 and 75 years old are worried about the dual risks of high inflation reducing spending power in retirement and a recession-driven economic downturn impacting retirement income. As a result of inflation, 6 out of 10 consumers also report reducing their spending.

Even more noteworthy is a corollary study of financial professionals revealing that registered investment advisors and broker-dealers are more concerned than consumers about inflation, market volatility, and the odds of a recession.

Their concerns include:

  • Increasing inflation reducing retirees’ spending power
  • Stock and bond market trends reducing retirees’ potential retirement income
  • Recession driving the economy down and impacting retirement income

These are the major takeaways from the third Protected Retirement Income and Planning (PRIP) Study from the Alliance for Lifetime Income and CANNEX. The survey of both individuals and financial professionals is designed to better understand and forecast retirement income trends.

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“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,” Jean Statler, chief executive officer of Alliance for Lifetime Income says in a statement. The alliance is a non-profit organization based in Washington, D.C., focused on awareness of and education about the importance of having protected lifetime income in retirement. “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.”

According to the report, four out of five financial professionals, about 78 percent, have changed their approach to retirement planning in the last year. This significant shift is largely in response to inflation, which was cited by 82% as a factor in the decision to make a change. Other top factors included bond returns and interest rates.

“Last year’s [PRIP] study saw nearly two-thirds of financial professionals changing their approach to retirement planning,” adds Gary Baker, president of CANNEX USA, which helps financial institutions evaluate and compare guarantees associated with retirement savings and retirement income products. ”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.”

The 2022 Protected Retirement Income and Planning Study was conducted online 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.