Americans’ retirement worries can’t catch a break.
More than 60% of retirement-age investors believe that low interest rates, combined with rising inflation, will make it harder to create a retirement income stream that will last their lifetimes, according to a new study from New York-based life insurance and annuity company Global Atlantic Financial Group.
Nearly a quarter of participants (24%) said they are extremely or very concerned about the impact inflation will ultimately have on their ability to live comfortably in retirement.
The survey focused on investors nearing or at retirement (ages 55 to 70) with between $250,000 and $2 million in assets and no pension. A whopping (96%) believe protected, guaranteed monthly income in retirement is important, with more than a third saying it was extremely important). However, less than a quarter currently use annuities (24%) or bonds (23%) to protect their assets.
Most of the respondents cited a mix of stocks and mutual funds (73%), and two-thirds (67%) cited cash equivalents as their ways to protect assets, in contradiction to fears of a stock market correction (66%) and continued inflation (57%) this year.
“External factors such as inflation, market volatility, and interest rates are all valid reasons for people to be concerned about income as they approach retirement,” said Paula Nelson, Head of Strategic Growth for Individual Markets at Global Atlantic.
Among those surveyed, about two-thirds (68%) work with financial professionals. And while nearly nine in ten (88%) of those advised by financial professionals have discussed ways to minimize the risk in their investment portfolio, just 28% say annuities were part of the conversation.
“The findings in the study reveal that retirees and those approaching retirement are interested in the benefits of annuities but don’t know enough to make an informed decision,” added Nelson.
Additional research found that annuity owners were actually more confident about retirement security than non-owners. Three in five of those with an annuity (62%) say the amount of money they have saved for retirement will last the rest of their life, versus less than half (48%) of those without an annuity. A full 40% of those without an annuity say they “don’t know” if the money they have saved will last the rest of their lives. Finally, half (48%) of annuity owners are extremely or very comfortable with their investment asset and retirement protection strategy, compared to only one-third (33%) of those without an annuity.
“This is an opportunity for financial professionals to learn more about the many options available in the market and how they can help their clients improve their overall retirement strategy,” said Nelson, noting that advisors would benefit from “understanding the unique strategies annuities can provide to improve their client’s ultimate outcome.”
Lynn Brackpool Giles is a contributing editor to 401(k) Specialist. Giles is a former Managing Director of Communications and Consumer Services for the Financial Planning Association (FPA), where she oversaw all corporate, legislative, and consumer communications. In her current journalistic practice, she is a frequent contributor to numerous financial services industry publications.
