UK baby boomers are not protecting retirement incomes against inflation - according to Hartford Life.
A survey into retirement inflation concerns show nine in 10 consumers are worried about its effect on their future income, but just two in five are taking action.
Hartford Life says investing in equity markets is a proven way to keep pace and perhaps surpass the effects of inflation over the long term, but many consumers see the fluctuating financial markets as an unacceptable risk.
Hartford Life CEO Michael Kalen says the lack of action is disturbing; especially considering recent studies show inflation affects retirees more than any other group.
“Boomers need to address this and start planning to protect their retirement incomes from the corrosive effect of inflation,” he says.
“They need to increase their retirement assets and the income they derive from those assets throughout retirement.”
Capital Economics research revealed the cost of living for some pensioners rose by 7.7% in the year ending April 2007, compared to a Retail Price Index of 4.5%.
A study conducted by Hartford Life last year found nearly 50% of investors are unwilling to accept risk in return for financial gain, but half of all respondents would be willing to pay for a guarantee to lock in a minimum level of retirement income.
“People want their pension income to stay ahead of inflation but it’s also clear that they recognise the risks associated with equity investments,” Kalen says.
“The introduction of guaranteed drawdown pensions provides a solution to this consumer demand in the UK.
“These products offer the income certainty of annuities but with the potential for growth of a drawdown scheme.”
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