4 ways to help clients fight inflation

Inflation, if not addressed, can chip away at retirement savings

Inflation is a long-term reality. If clients do not deal with the risk of inflation properly, problems may occur. The more strategies to address the risk of inflation incorporated into a holistic financial strategy, the greater the chance of success in retirement.

In recent years, we have experienced the highest rates of inflation in decades.

Inflation hurts savers and increases interest rates, so consumers are worried.

The vast majority of Americans (71%) said their income is not keeping up with rising expenses, according to the 2024 Q1 Quarterly Market Perceptions Study* from Allianz Life Insurance Company of North America (Allianz Life). And 76% said they worry the rising cost of living will affect their retirement plans.

A financial professional can help their clients incorporate strategies to mitigate the effect of inflation.

68%
expect inflation will get worse over the next 12 months
76%
worry they might not be able to afford the lifestyle they want in retirement due to the increased cost of living
79%
said a guaranteed lifetime income option as part of their retirement plan would ease their inflation concerns

How a financial professional can help

1

Show clients how inflation could affect their retirement expenses

With the length of retirements increasing, the potential risk of inflation to retirement is greater. You will want to analyze clients’ retirement income needs based on inflation’s impact on the potential of a longer retirement. 

Start by determining a client’s potential retirement income and consider the impact of inflation on their consumption basket. At a modest rate of inflation, costs could double in about 30 years. At today’s rates, prices will double even sooner.

2

Review the impact of high inflation and low interest rates of return during retirement

Determine a client’s retirement income sources and whether cost-of-living adjustments or increasing income opportunities apply to those sources of income. A client’s total rate of return may be different than what they anticipated.
3

Discuss guaranteed lifetime income options like annuities

Guaranteed lifetime income options like annuities can help address the risk of inflation. Some annuities include features that offer increasing income potential through either built-in or additional-cost riders to help alleviate inflation concerns.

4

Consider the rising costs of health care

Help clients understand options to pay for health care. Keep in mind that Medicare does not cover everything and supplemental insurance may be necessary. Options include long term care insurance policies and riders to help fill in the gaps. But, these add to your monthly expenses.

InformationInformation

We have created materials that you can use with your clients

To help you talk to clients about inflation risk to their retirement strategy, we have valuable resources, including a client seminar with a customizable invitation.

* Allianz Life conducted an online survey, the 2024 Q1 Quarterly Market Perceptions Study, in February 2024 with a nationally representative sample of 1,005 respondents age 18+.

Allianz Life Insurance Company of North America does not provide financial planning services or advice related to Medicare.

Annuities can help your clients meet their long-term retirement goals by offering tax-deferred growth potential, a death benefit during the accumulation phase, and a guaranteed stream of income at retirement.

Fixed index universal life (FIUL) insurance provides long-term financial protection, financial reassurance for beneficiaries through the death benefit, and can help reduce the overall risk in a client's financial portfolio.

The potential for these features to help address inflation is not guaranteed and is dependent on a variety of factors.

Guarantees are backed by the financial strength and claims-paying ability of Allianz Life Insurance Company of North America. Variable annuity guarantees do not apply to the performance of the variable subaccounts, which will fluctuate with market conditions.

Products are issued by Allianz Life Insurance Company of North America, 5701 Golden Hills Drive, Minneapolis, MN 55416-1297. Variable products are distributed by its affiliate, Allianz Life Financial Services, LLC, member FINRA, 5701 Golden Hills Drive, Minneapolis, MN 55416-1297.

This content does not apply in the state of New York.

For financial professional use only – not for use with the public.