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.
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