Survey shows inflation increases retirement savings worries

The American Council of Life Insurers included questions in the poll that it says show a DOL fiduciary rule would hinder access to retirement advice.

Rising inflation has most Americans worried about whether they can save enough money to fund their retirement, while economic headwinds have more of them thinking about purchasing annuities to stabilize their post-work income, according to a survey released Monday.

Inflation is a concern for 85% of the respondents in the poll, which was sponsored by the American Council of Life Insurers. High housing costs (67%) and the threat of being laid off (38%) are weighing on their minds as they build their nest eggs. In addition, 81% fret about having enough money for retirement.

The survey asked whether retirement savings concerns has made respondents inclined to buy “a guaranteed lifetime income investment product that pays out like a pension by providing periodic payments during retirement.” The poll shows that 54% would be more likely.

Another question asked whether “people should have the option to work with any type of financial professional who is offering products and services that meet their needs,” which generated an affirmative response from 91% of those surveyed.

That question follows an argument that ACLI and other insurance and brokerage industry trade associations have made against a Department of Labor fiduciary rule regarding investment advice in retirement accounts. They assert that imposing such a standard would limit a number of financial professionals, including those selling insurance, from working with retirement savers.

The Obama administration’s DOL fiduciary rule was vacated by a federal court in 2018. The Biden administration left on the books a Trump administration fiduciary rule but has indicated on its regulatory agenda that it plans to propose amendments to the measure that could expand the number of financial advisors who are fiduciaries.

The DOL recently dropped its appeal of an adverse ruling by a federal appeals court that struck down DOL guidance that deems as a fiduciary act a one-time recommendation to roll over funds from a company retirement plan to an individual retirement account.

The DOL’s move increased the likelihood it will soon promulgate a new fiduciary proposal.

“This research informs the discussion around the Labor Department’s attempt to resurrect a fiduciary only regulation,” ACLI CEO Susan Neely said in a statement. “Before it was vacated by a federal court in 2018, the regulation hindered access to products and services consumers indicate in the survey that they want.”

The ACLI released a survey last year that it said shows a fiduciary regulation would harm investors. Investor advocates argue that a fiduciary rule would better protect investors from conflicts of interest surrounding investment advice from insurance professionals and brokers.

The poll results resonate with Brad Campbell, a partner at Faegre Drinker Biddle & Reath. He has had personal experience with small-balance IRAs on which a financial firm ceased to give recommendations under the Obama administration rule.

“It did, in fact, cause people to lose access to advice,” said Campbell, an assistant secretary of labor and head of the Employee Benefits Security Administration under President George W. Bush. “We need different types of financial professionals using different [business] models to serve the needs of entire population.”

Annuity sales hit a record in 2022. In the ACLI survey, 71% of respondents said they would be interested in buying an annuity after the product was explained to them in a survey question. Another question shows that 50% of respondents were not familiar with annuities.

“Retirement savers are clearly concerned about inflation and the overall economy,” Neely said. “Guaranteed lifetime income products, which life insurers offer through annuities, and access to financial planning options are two ways retirement savers indicate they can address their concerns.”

The ACLI online poll of 1,003 retirement savers between the ages of 45 and 65 was conducted between May 10 and May 15 by Morning Consult. It has a 3% margin of error.

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