Americans and advisors divided on inflation, finds survey

A recent study by Jackson National Life Insurance Company indicates that US consumers are increasingly concerned about the impact of inflation on their financial security in retirement.

The report, part of Jackson's Security in Retirement Series conducted with the Center for Retirement Research at Boston College, highlights a growing pessimism among both pre-retirees and retirees.

The study, which surveyed over 1,500 individuals aged between 55 and 85 and 400 financial professionals in 2023, found a divide between the two groups. While a quarter of consumers (26 percent) predict inflation rates north of 5 percent in the next few years, only eight percent of financial professionals held that view.

“[W]e’re seeing that, to varying degrees, consumers and financial professionals are either unsure or simply getting it wrong,” said Glen Franklin, assistant vice president of research, RIA and lead generation strategy for Jackson’s marketing and distribution business, said in a statement.

The latest inflation figures from the Bureau of Labor Statistics showed some relief from consumers, with core CPI rising in April by a modest 0.3 percent compared to the month prior, and just 3.4 percent from a year ago.

To help safeguard their clients against inflation, advisors used a host of strategies, with diversification as the top approach. Around two-fifths (42 percent) recommended increasing their exposure to annuities with guarantees, a substantial change from just 32 percent who did so from 2021 until the end of 2022.

Advised consumers who received anti-inflation advice reportedly lost just 2 percent of their purchasing power on average in the past 12 months to rising price pressures, compared to 4 percent of those who didn’t work with an advisor.

Retirees and pre-retirees in the survey were also split when it comes to their perceptions of inflation. While 41 percent of pre-retirees said price pressures weighed on their household finances, just 29 percent of retirees said the same.

“High inflation has real impacts on financial security in retirement,” said Alicia Munnell, director of the Center for Retirement Research at Boston College.

“While many households did offset the short-term pain by tapping assets and cutting back on saving, such actions will mean less consumption in the future,” Munnell said.