Inflation Is Hurting Retirees’ Dreams

According to a new Schroders report, just 4 percent of retirees say they are “living the dream.”


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Nearly 70 percent of Americans are concerned with outliving their assets, according to a new survey by Schroders, the London-based asset manager with nearly $1 trillion in assets under management.

In addition, less than half of Americans — 44 percent —said they have enough saved for retirement, according to the survey.

Inflation plays a big part in why retirees are worried.

The results are part of an annual retirement survey conducted by 8 Acre Perspective on behalf of Schroders around the state of retirement readiness and the key retirement concerns of American investors. The company polled 2,000 U.S. investors between the ages of 28 and 79 from March 15 to April 5. The survey included 498 retired Americans.

According to the report, 89 percent of respondents were concerned that inflation was lessening the value of their assets, and 85 percent were worried about higher-than-expected health care costs. This is a real fear for many Americans; almost half (47 percent) of all retirees said that their expenses were higher than they expected in retirement.

Additionally, 76 percent of Americans were worried about how a market downturn would reduce their assets, and 69 percent were concerned about not knowing how to generate income or how to draw down assets.

This concern over money and assets had a negative impact on the health of some respondents, with 33 percent concerned about how financial stress was impacting their overall health and another 26 percent losing sleeping over their financial situation. According to the survey, retired Americans spend about 14 percent of their total monthly income on health care expenses.

When asked to “describe their financial situation in retirement,” only 4 percent said they were “living the dream,” while another 4 percent said they were “living the nightmare.” Almost half, 44 percent, described themselves as “comfortable,” while 34 percent said they were “not great but not bad” and 15 percent said they were “struggling.”

“Whether it’s a trip to the gas station, grocery store, or pharmacy, prices in the U.S. have increased noticeably in recent years, and that is particularly challenging for retirees living on fixed income sources,” Deb Boyden, head of U.S. Defined Contribution at Schroders, said in a statement. “The challenges facing retirees today are further evidence of the retirement savings crisis. For younger generations with longer time horizons, now is the time to prioritize saving for a brighter future.”

Most retired Americans — 58 percent — said they had “no idea how long their savings will last,” and 63 percent said they “wish they had done more planning prior to retiring.”

Retirement planning is a core component of financial advisors’ offerings.

According to a recent Natixis Investment Managers survey, retirement planning assistance was one of the most requested services by investors of their advisor. A retirement survey by Schroders last year found that retirees with financial advisors had nearly double the average monthly income compared to those without.

For American retirees, most are using a pension plan to generate income in retirement (38 percent) or a spouse’s pension plan (34 percent), while the rest depend on a 401(k), 403(b), or 457 plan (22 percent) or a spouse’s 401(k), 403(b), or 457 plan (24 percent).

“The corporate pension plans that are being relied upon by today’s retirees may not be there for all retirees in future generations,” said Boyden. “This shift in how Americans will be meeting their expenses in retirement moving forward underscores the urgency for bolder actions from retirement savers, plan sponsors, and asset managers. We can and should do more to improve the economic security of tomorrow’s retirees.”

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