Inflation worries gnaw at most Americans, says survey

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That gnawing feeling in the pit of your stomach? It just may be inflation worries, according to a recent Thrivent Financial for Lutherans survey of 2,000 American adults.

Ninety-three percent of all respondents, and 96 percent of pre-retirees (aged 40-64), say they worry about inflation's negative impact on their finances during their retirement years. Three of five pre-retirees (59 percent) say they worry about inflation's effect on their retirement "a lot."

Those most inclined to say they worry a lot about inflation's impact on finances in retirement include those aged 45-54 (64 percent), those with incomes of $25,000 to $49,999 (60 percent), and those who are not married (55 percent).

Only one demographic group reported an inflation worry rate of less than 90 percent: adults aged 18-24 years. Even among this group, however, 88 percent reported they worried at least a little about inflation's impact on their retirement finances, and 50 percent reported they worried about inflation in retirement a lot.

"Fear of inflation in retirement runs deep and broad," says Ann Koplin, Thrivent Financial director of retirement marketing. "Given that people's retirements can span 20 to 30 years or more, accounting for inflation is a critical challenge for people's financial security."

What can individuals do if inflation worries are keeping them awake at night? Koplin offers several suggestions.

"Of course it is important to build a nice retirement nest egg during one's working years, if possible," says Koplin. "But beyond that, individuals need to position their assets in retirement for growth to combat inflation and for guaranteed income. Individuals may then be able to add to their income base over time as they experience investment gains and convert a percentage of their assets from equities (and growth) to income."

Koplin adds that it is important for those in retirement to carefully monitor and adjust their spending, too. She says that some financial services organizations offer programs and services that help individuals align spending, growth and guarantees so that they can have increased confidence that they will not outlive their retirement assets.

"Having a financial strategy that is flexible enough to adapt to a person's changing needs and circumstances is a must," notes Koplin. "Inflation can be detrimental to one's retirement finances, but carefully managing your money throughout your golden years can help counter inflation's bite."

Thrivent Financial's Retirement Finances Study was conducted by Synovate, the market research arm of Aegis Group plc. The online survey of 2,000 American adults—including 745 pre-retirees aged 40-64—was conducted Jan. 20-26, 2011. The margin of error for questions answered by all 2,000 respondents is 3 percent.

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