Society of Actuaries' Risk Report Highlights Impact
of Inflation on Retirement Planning
SCHAUMBURG, Ill., Feb. 28, 2011 /PRNewswire via
COMTEX/ -- Compared to other planning activities,
only 72 percent of pre-retirees and 55 percent of
retirees are calculating the effects of inflation on
their retirement planning, according to a new report
from the Society of Actuaries (SOA). This finding
highlights the need for individuals to better
understand and manage inflation and longevity risks
when planning for retirement. The report, Process of
Planning and Personal Risk Management, identifies
key findings from a survey of retirees and
pre-retirees as it relates to retirement risk
Pre-retirees are more likely than retirees to
express concern about inflation, investment and
longevity risks. For example, the report findings
indicate that seven in 10 pre-retirees (71 percent)
are very or somewhat concerned about inflation risk,
compared with six in 10 retirees (58 percent).
Similarly, six in 10 pre-retirees (62 percent), and
half of retirees (52 percent), 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 percent vs. 47 percent) and maintaining a
reasonable standard of living (56 percent vs. 45
percent). Compounding inflation and savings
concerns, 39 percent of pre-retirees and 36 percent
of retirees withdraw money from their savings as
needed with no set plan.
"By not having a set plan for how they spend
savings, these individuals are exposing themselves
to more risks down the road, such as outliving their
assets or not having funds to manage unexpected
long-term care costs," said actuary Steve Vernon,
FSA, MAAA. "Individuals always need to take
inflation into consideration and now is the time to
take action to address these inflation and longevity
concerns by planning for multiple scenarios."
Aside from inflation concerns, the report highlights
other findings on managing risk in retirement,
Only five percent 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
percent for pre-retirees and seven percent for
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 percent 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 percent for retirees).
This SOA report highlights findings from the 2009
Risks and Process of Retirement Survey Report, and
focuses on the issues in the survey specifically as
they relate to the process of planning and personal
risk management for retirement. The survey was
conducted through telephone interviews of 804 adults
age 45 to 80 in July 2009 and asked respondents
about a number of risks relating to retirement. For
the full report "Process of Planning and Personal
Risk Management," please visit http://www.soa.org/files/pdf/research-key-finding-process-planning.pdf.
Actuaries bring a complex future into focus by
applying unique insight to risk and opportunity.
Known for their comprehensive approach, actuaries
enable smart, more confident decisions.
About the Society of Actuaries
The Society of Actuaries is an educational, research
and professional organization dedicated to serving
the public, its members and its candidates. The
SOA's mission is to advance actuarial knowledge and
to enhance the ability of actuaries to provide
expert advice and relevant solutions for financial,
business and societal problems. The SOA's vision is
for actuaries to be the leading professionals in the
measurement and management of risk. To learn more,
Contact: Kim McKeown, Society of Actuaries
847.706.3528, [email protected]
Megan Filotto, GolinHarris
312.729.4259, [email protected]
SOURCE Society of Actuaries
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