Typical U.S. retirees and near retirees are anticipating a world in which inflation is low but stock price increases are also low.
Researchers at Nationwide Financial Services Inc., Columbus, Ohio, have published data supporting that conclusion in a summary of results from a recent survey of 500 U.S. residents ages 55 to 70.
Half of the survey participants were retired and half were working, and they had either annual household income of at least $40,000 or financial assets of at least $100,000.
Only 29% of the participants said they expect to see the annual inflation rate exceed 5% over the next 10 years, if they already were retired, or during the first 10 years of their retirement, if they were still working.
About 50% of the participants said they expected the annual inflation rate to be about 3% to 4%.
Similarly, when researchers asked the retirees about annual stock market gains over the next 10 years and asked near retirees about gains anticipated for the first 10 years of retirement, only 23% said they expected average annual gains exceeding 6%, and 25% said they were expecting stock market gains to be less than 4%.
The Nationwide researchers used “cluster analysis” to break participants down into 5 market segments.
The segments of most interest to financial services professionals are the “Live Wells,” who included 34% of the participants and are concerned about affording long term care, and the “Connecteds,” who included just 11% of the participants but showed the most interest in wanting to help children and leave money to children. The Connecteds also showed a strong interest in efforts to prepare for the cost of long term care.