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Older Investors Blame Inflation, Low Interest Rates as They Worry About Retirement Income 

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What You Need to Know

  • While 96% believe protected, guaranteed monthly income in retirement is important, only 24% said they use annuities and 23% bonds.
  • Although 88% of those with an advisor said they have discussed minimizing risk, just 28% said annuities were mentioned.
  • Annuity owners are more confident about their retirement security.

Sixty-one percent of retirement-age investors in a recent survey believe that low interest rates and rising inflation will make it harder to create a retirement income stream that will last their lifetime, Global Atlantic Financial Group reported this week.

A quarter of participants said they are extremely or very concerned about the effect inflation will ultimately have on their ability to live comfortably in retirement. 

The survey of retirement-age investors with between $250,000 and $2 million in assets and no pension also found that while 96% believe protected, guaranteed monthly income in retirement is important, only 24% said they use annuities and 23% bonds to protect their assets. 

Instead, 73% cited a mix of stocks and mutual funds and 67% cited cash equivalents as the way they protect assets — in contradiction to fears many reported of a stock market correction and continued inflation 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,” Paula Nelson, head of strategic growth for individual markets at Global Atlantic, said in a statement. 

Nelson said the survey findings show that retirees and those approaching retirement are interested in the benefits of annuities but do not know enough to make an informed decision. 

“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,” she said. 

Artemis Strategy Group conducted the online survey among 1,023 investors ages 55 to 70 with assets between $250,000 and $2 million and no pension. Global Atlantic said this sample represents a critical group in transition. 

The firm estimates that 7 million U.S. households, 12 million people in total, have between $250,000 and $1 million and do not have a pension.

The Annuity Benefit

Sixty-eight percent of survey respondents reported that they work with financial professionals. But even though 88% of this group said they have discussed ways to minimize the risk in their investment portfolio, just 28% said annuities were part of the conversation. 

The study also found that annuity owners are more confident about retirement security than non-owners. Sixty-two percent said the amount of money they have saved for retirement will last the rest of their life, versus 48% of those without an annuity. 

Forty percent of those without an annuity said they do not know whether the money they have saved will last the rest of their lives. 

Finally, 48% of annuity owners purported to be extremely or very comfortable with their investment asset and retirement protection strategy, compared with 33% of those without an annuity. 

“With this survey data in mind, financial professionals should consider adding annuities to their practice and would benefit from understanding the unique strategies annuities can provide to improve their client’s ultimate outcome,” Nelson said.