Jackson Study Reveals Consumers Anxious About Inflation; Financial Professionals Recommend Diversifying

Jackson National Life Insurance Company (Jackson), the main operating subsidiary of Jackson Financial Inc.¹ (NYSE: JXN), today released key findings from its study on how consumers and financial professionals perceive inflation risk and the associated impacts on retirement income planning. The study is the second installment of Jackson’s Security in Retirement Series conducted in partnership with the Center for Retirement Research at Boston College, which aims to provide useful, actionable, research-based insights on a variety of potential impacts to financial security in retirement.

Jackson research shows that a consumer’s perception of a high-inflation environment, coupled with broader economic uncertainty and concerns about Social Security, remains top of mind – particularly as it relates to retirement planning. In fact, more than half of consumers surveyed are more pessimistic about their financial security outlook now than they were in 2021, with nearly 30% being “much more pessimistic” after experiencing a peak inflationary environment in 2022. Concerns of inflation affect not only consumers’ and financial professionals’ attitudes, but also their behaviors around lifestyle, buying habits and investment portfolios.

Additional findings from the research include:

• More than half of consumers surveyed were unclear about current rates of inflation. This cohort of consumers reported inaccurate rates or indicated they could not make an estimate of inflation rates. These findings indicate a low level of awareness and a high level of uncertainty among respondents.
• Overall, predictions for future rates of inflation vary among financial professionals and consumers. Research found 26% of consumers believe inflation rates will exceed 5% in the next few years, compared to only 8% of financial professionals.
• Diversification ranked highest as a specific method used by financial professionals to fight against inflation risk in their clients’ portfolios. Additionally—in 2023, 42% of the financial professionals surveyed recommended an increased asset allocation to annuities with guarantees, up noticeably from the 32% who did so from the start of 2021 until the end of 2022.
• Consumers whose financial professionals suggested inflationary mitigation strategies lost less of their purchasing power than others. Consumers working with a financial professional lost an average of 2% of their purchasing power over the preceding 12 months due to inflation, while those not working with a financial professional lost twice as much – an average of 4%.
• Pre-retirees surveyed indicated they feel the impacts of inflation more than retirees. Forty-one percent of pre-retirees reported a negative impact from high interest rates on their household finances, while only 29% of retirees reported the same effect.
• The research shows that much of how people feel about inflation and the broader economy relates to where they get their news. Reliance on certain news sources can reflect levels of economic optimism or pessimism based on the bias of the media outlet².

“Understanding how inflation impacts our economic environment is critical to financial planning, and we’re seeing that, to varying degrees, consumers and financial professionals are either unsure or simply getting it wrong,” said Glen Franklin, Assistant Vice President of Research, RIA and Lead Generation Strategy for Jackson National Life Distributors LLC (JNLD), the marketing and distribution business of Jackson. “While inflation risk is important to comprehend and manage throughout the retirement process, misunderstanding the effects can lead to either over- or under-spending retirement savings. It can also significantly impact saving before retirement begins. Our findings suggest there is a strong opportunity for more financial professionals to actively address clients’ concerns, and that consumers clearly benefit from such guidance in modifying their investments.”