“When asked about their main economic worries today, the majority of respondents put inflation at the top of their list–with 32% saying they were either “panicked” or “very worried” about it. Despite being a top concern, the study found that 64% of respondents do not have a financial plan that addresses the rising cost of living in retirement.
Fifty-four percent of those surveyed claimed they were either “terrified” or “very concerned” that the rising cost of living would affect their ability to pay for healthcare. The same concerns were expressed about long-term care (45%), housing (33%), groceries/food (29%), and travel/leisure (27%). Nearly four out of 10 respondents expressed they were either “panicked” or “very worried” they might not be able to afford the lifestyle they want in retirement due to the increased cost of living.
While addressing inflation during retirement can be a challenge, Americans expressed interest in solutions that could provide guarantees with the ability to increase over time. The vast majority (73%) of respondents preferred the idea of a financial product that starts with a slightly lower income rate, but offers the possibility for income increases over time compared to one that has a higher, but fixed, rate.”
Those planning for retirement are legitimately concerned that the erosion of purchasing power due to inflation will have a dramatic impact on their ability to navigate retirement effectively, yet our industry has been slow to help advisors address this concern with solutions designed to combat inflation.
The majority of Americans (73%) are looking for an income solution that can increase over time, yet we continue to push guaranteed income solutions that remain constant over time.
Advisors have the tools to address these concerns but are not properly educating their clients on the options. Companies are offering CPIU inflation increase options, index increasing options and even a fixed rate increase options on FIAs. Putting together a comprehensive plan which includes inflation protection addresses these clients concerns.
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