These are the top retirement income concerns for many older Americans, poll finds

As older Americans prepare for retirement, about four in five say they are increasingly concerned about rising inflation and the risk of recession, according to a new investigation Alliance for Lifetime Income and CANNEX.

Among respondents aged 45 to 75, 81% say they are worried about their reduced purchasing power in retirement due to rising inflation. According to the Protected Retirement Income and Planning Study, 79% of respondents fear that a recession will bring down the economy and affect their retirement income.

Inflation jumped in June to reach a new high of 40 years, marking the fifth time he has broken that record this year. The consumer price index (CPI) rose 9.1% annually, reaching its highest level since November 1981, according to the Bureau of Labor Statistics (BLS).

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Americans take action on rising inflation

As inflation anxiety grows, some Americans have started making financial adjustments, with about 60% of respondents saying they cut spending because of inflation, the survey found.

Another Morning Consult report also said older generations expressed higher levels of concern about rising prices and inflation. These survey participants said they had given up shopping and turned to cheaper substitutes.

Travel is one of the main areas affected by rising prices. During the summer season, when holidays are more common, the Morning Consult study predicted that rising gas prices could encourage more Americans to stay home and avoid long trips.

Amid rising inflation and recession fears, Bank of America (BofA) recently adjusted its forecasts to show that a slight recession could occur this year. BofA predicted that real GDP in the fourth quarter of 2022 will shrink by 1.4%, followed by an increase of 1% in 2023. But on the positive side, the bank explained that this will help moderate inflation levels. raised for decades.

GDP fell 0.9% in the second quarter of 2022, marking the second consecutive quarter of decline, the technical definition of a recession.

The Federal Reserve is also doing what it can to curb inflation. After its last meeting in July, the Federal Open Market Committee (FOMC) announced that it was raising the federal funds rate by 75 basis points, bringing the target range to 2.25% to 2.5%. This is the fourth rate hike since the start of the year.

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Finance professionals are changing their approach to retirement planning

The Alliance for Lifetime Income and CANNEX survey indicates that many financial professionals are changing their approach to retirement planning due to economic conditions. But not all of them changed gears.

“The chasm between consumers and financial professionals when it comes to protecting and spending money in retirement continues to confuse this latest survey,” said Jean Statler, CEO of Alliance. for Lifetime Income. “Amid record inflation, a bear market and global economic uncertainty, the mismatch between what finance professionals rely on to create retirement income and what clients are looking for is a problem. .

“Ninety-two percent of finance professionals are concerned that inflation will reduce clients’ purchasing power, so it’s good that many of them have changed their approach to retirement planning over the past of the past year,” Statler continued. “But for financial professionals who tell their clients to just avoid risk and who don’t consider protected income options like annuities, don’t be surprised if you find them seeking advice elsewhere.”

According to the survey, about 78% of financial professionals have adjusted their retirement planning advice in the past year. This change was largely due to inflation, which was cited by 82% of financial planners as a reason for changing. Other major drivers include bond yields (52%) and interest rates (48%).

“Last year’s study saw nearly two-thirds of finance professionals (65%) change their approach to retirement planning,” said CANNEX USA President Gary Baker. “Fast forward to today and we see this trend has accelerated, with a third of finance 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 looking for an alternative to traditional asset allocation strategies, and we’re encouraged to see advisors responding to that demand,” Baker said.

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