To address inflation risks, many Americans want financial products that provide guaranteed income in retirement as well as opportunity for increasing income, according to a study by Allianz Life. Eighty percent are interested in a product that offers income for life, and 86% are interested in a product that offers guaranteed income for life plus the opportunity for income to increase over time.
Seventy-seven percent prefer a guaranteed income option that has a lower income rate, but offers the possibility of increases, over one that has a higher starting income rate with no opportunity to increase. Fifty percent say that it’s very or extremely important for a product to offer the possibility of income increases. Allianz Life vice president of Consumer Insights Katie Libbe said, “Many people depend on an annual pay raise to cover various increasing expenses, and build long-term savings. Consumers facing retirement will need to explore options that create a similar income strategy by using a portion of their portfolio to get guaranteed income for life with the chance for increases.” Annual pay increases are an important part of maintaining financial security for many Americans. In fact, 67% say they got a pay raise at least half of the time during their working years. Yet, if faced with a frozen income that offered no chance for an increase in annual salary, 53% say they would be very worried or even panicked as to how they would pay for everyday expenses.
Twenty-eight percent of those surveyed (41% of people earning less than $50,000) worry that they won’t be able to pay for basic needs, such as housing, food, and medical care. Considering the critical role of pay raises in managing rising costs, this scenario provides a glimpse into the situation of retirees who are on a fixed income. Libbe said, “Clearly, there is strong consumer appetite for guaranteed income and increasing income solutions in retirement. It’s important that these benefits are available so Americans can have more confidence in their ability to manage rising costs when pay increases are no longer an option.”
Recent research on Allianz Life annuities reveals that income benefits – built-in or through an optional rider at an additional cost – have delivered income increases to many customers. Income from Allianz Life fixed index annuities has helped address inflation. Purchasing power actually increased over time. Ninety-three percent of clients who are receiving income from these fixed index annuities got an increase. Sixty-seven percent of these clients got a payment increase every year