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.
Right now, we are experiencing inflation at the highest rates in decades. Inflation is up 7.7% in the last 12 months ending in September, according to the Bureau of Labor Statistics. In comparison, the average rate of inflation since 1922 has been 2.8%.
Inflation hurts savers and increases interest rates, so consumers are worried.
The vast majority of Americans (80%) said they worry about rising inflation continuing to have a negative impact on the purchasing power of their income in the next six months, according to the 2022 3Q Quarterly Market Perceptions Study* from Allianz Life Insurance Company of North America (Allianz Life). And 75% 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.