Only Half of Retirees Factor in Inflation

Seventy-two percent of pre-retirees and 55% of retirees are calculating the effects of inflation on their retirement planning, according to the Society of Actuaries (SOA).

The report, Process of Planning and Personal Risk Management, says pre-retirees are more likely than retirees to express concern about inflation, investment and longevity risks. For example, seven in 10 pre-retirees (71%) are very or somewhat concerned about inflation risk, compared with six in 10 retirees (58%). Similarly, six in 10 pre-retirees (62%) and half of retirees (52%) are concerned about interest rate changes impacting their retirement.   

Pre-retirees are also more likely than retirees to report being concerned about depleting their savings (58% vs. 47%) and maintaining a reasonable standard of living (56% vs. 45%). Compounding inflation and savings concerns, 39% of pre-retirees and 36% of retirees withdraw money from their savings as needed with no set plan.   

Other survey findings include: 

  • Only 5% of pre-retirees have a planning horizon to or beyond their life expectancy.  
  • Few individuals look 20 years or more into the future when making important financial decisions (13% for pre-retirees and 7% for retirees).  
  • Sixty-eight percent of retirees create a plan to manage their money and how to spend it each year so they do not outlive their finances.  
  • Seventy-three percent of retirees consider allocating their investments and savings to different types of assets. Only 24% of retirees have already purchased or plan to buy a product with guaranteed income for life.  
  • Ninety percent of pre-retirees have already eliminated or plan to eliminate all of their consumer debt as a means to protect them financially (81% for retirees). 
The survey was conducted through telephone interviews of 804 adults ages 45 to 80 in July 2009 and asked respondents about a number of risks relating to retirement.