Inflation Concerns Have Spiked for Investors, with Retirement Effects

Inflation anxiety is spiking for investors, driving down retirement confidence for many retirement savers, new Nationwide Retirement Institute data shows. 

The Nationwide Advisor Authority survey shows 48% of advisers and financial professionals are optimistic about their 12-month financial outlook, a 15-percentage point decrease from last year. 

Investors’ inflation concerns in the next 12 months spiked this year, to 46% from 29% in 2021 and 17% in 2020, the survey data shows. The report also finds that managing volatility is a top financial concern for 15% of investors, down from 18% last year and 22% in 2020.

“While it’s surprising that expectations about volatility have dropped among investors, it may indicate that they are coming to grips with the possibility that volatility is the new normal,” says Mark Hackett, chief of investment research, in a press release. “While investor concerns have lessened, both volatility and inflation are likely to persist in the year ahead. Financial professionals should be talking to clients about implications for their portfolio.”

Inflation and volatility have deflated retirement confidence over the last 12 months, which is indicated by respondents’ changed retirement plans, the survey shows.

The survey asked investors how their retirement plans have changed over the last year and 20% said they plan to retire later than planned, 47% plan to retire at about the same time and 12% earlier than planned. Another 12% don’t know if they ever will be able to retire and 9% don’t know or are unsure, the data shows.   

Among investors, additional top concerns are taxes at 22%, compared to 27% in 2021 and 15% in 2020.

Nationwide finds 85% of investors working with a financial professional have a strategy to protect themselves against outliving their savings in retirement, compared to 52% of investors who are not working with a financial professional.  

The survey shows 87% of investors who have a financial plan agree that working with a financial professional helps them feel more confident to make the right investment decisions, even during a financial crisis and among that group, 40% said they strongly agree. Among investors,89%, agree working with a financial professional helps them feel more confident about making the right investment decisions, even in a financial crisis, according to the survey.  

The survey also shows 85% of investors working with an adviser or financial professional have a strategy to generate guaranteed income in retirement, compared to 58% of investors who are not working with a financial professional.  

Additionally, Nationwide finds 55% of investors currently work with an adviser or financial professional, compared to 63% last year and 67% in 2020. 

The survey also shows discrepancies between the levels of concern for investors and financial professionals about an economic recession in the next 12 months. 

Nationwide finds 74% of investors are concerned about a recession as are 82% of financial professionals. 

For investors and financial professionals, the study notes “recession concerns mirror levels seen at [the] height of [COVID], in 2020: 75% for investors and 77% for professionals.

The Advisor Authority Survey was conducted online by the Harris Poll for Nationwide Advisory Solutions from July 27 to August 16, among 506 financial advisers and 521 investors, ages 18 and over.