The Federal Reserve enacted a 0.25% interest rate increase at their meeting this week to begin combatting record inflation, but it looks to be a long road to get back to reasonable levels, with Fed expectations several years out for stabilizing inflation around 2%.
So how concerned are consumers about inflation? Turns out quite a bit, across all generations, according to a recent survey by Nationwide. The survey polled 2,000 consumers across a swath of generations and found that nine out of 10 reported being either somewhat or else very concerned about inflation.
Not surprisingly, the youngest generation, Gen Z, reported the least amount of concern, but even that was only by a small margin. Gen X actually reported the greatest amount of concern regarding inflation over their Boomer counterparts, but all are facing very real fears regarding their impacts on income, retirement, and purchasing power.
Image source: Nationwide Survey
The Boomer generation has perceived their purchasing power declining the greatest, a full 77%; this is most likely due to the fact that they are the generation most heavily relying on fixed income and thereby feel the pressure most. This older generation, along with Gen X, who might have been working and spending during the last major inflationary period in the U.S. in the 1970s, also reported that they believe increased prices are going to be a long-term phenomenon.
So what kind of impacts is it having for younger generations who aren’t on fixed income yet but are feeling the squeeze in their everyday spending? Inflationary pressures have translated to Gen Z consumers largely delaying major life events such as buying a home, starting a family, and retirement plans. All of these delays could have long-term implications for their finances, and are something that advisors should be aware of when discussing retirement planning.
“For financial professionals, client concerns about inflation can present opportunities to fine-tune their financial plans. Generational differences and experiences can influence the challenges your clients face and the solutions that can help keep their financial plans on track,” Nationwide wrote.
Nationwide offers a variety of actively managed ETFs for advisors that cater to a range of investment exposures and strategies for those seeking retirement income options for their clients as part of their bigger retirement planning pictures.
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