Inflation spooks retirees more than healthcare costsBY KARREN VERGARA | FRIDAY, 10 MAY 2024 12:44PMThe tentacles of inflation are taking a toll on retirees' savings as the diminished value of their money is their biggest financial worry over healthcare costs, according to a Schroders survey. An overwhelming number of participants in the 2024 US Retirement Survey said inflation is their major cause of stress as only 4% are "living the dream". Eighty-nine percent are afraid inflation is eroding the purchasing power of their assets. This is exacerbated by too many retirees facing higher-than-expected healthcare costs (85%) while over half (56%) believing they have not saved enough. Schroders head of US defined contribution Deb Boyden said whether it's a trip to the petrol station, grocery store, or pharmacy, prices in the US have increased noticeably in recent years, and that is particularly challenging for retirees living on fixed income sources. "The challenges facing retirees today are further evidence of the retirement savings crisis. For younger generations with longer time horizons, now is the time to prioritise saving for a brighter future," she said. A survey from Equip Super yielded similar results. Six in seven Australians (85%) are more cautious about how and what they spend money on, given the rising cost of living and inflation pressures. Equip Super head of advice Paul Stocker said it's completely understandable that everyday Australians are feeling the pinch of rising costs. "While it makes sense to trim some spending to alleviate immediate financial pressures, it's crucial to recognise the enduring importance of maintaining a focus on long-term financial security. Even small super contributions can have a positive impact on retirement, as the value of those contributions compounds over time," he said. To prepare for retirement, 34% of members make extra super contributions; 38% are paying off home loans; and 46% are reducing their debt. Meanwhile, the majority (68%) of retirees in Schroders' survey believe they will outlive their assets. One-in-three (33%) retirees are concerned that financial stress will impact their overall health; about one in four (26%) have lost sleep worrying about their financial situation. Related News |
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SCHRODER INVESTMENT MANAGEMENT AUSTRALIA LIMITED