In its latest international pension paper, Preparing for Retirement – Financial Strategies of the Affluent 50+ Generation in European Countries, AGI reveals that some 56% of the 1,400 wealthy individuals it polled view rising prices as a financial risk during retirement – ahead of unanticipated expenses (49%), poor capital market performance (40%), and outliving their assets (18%).
Looking at the results on a country-by-country basis, inflation fears were greatest in the UK and Germany, and lowest in Austria and the Netherlands – where respondents respectively considered unforeseen expenses and poor investment performance as bigger threats to their pension pots.
However, survey participants also demonstrated a patchy understanding of how inflation can affect their savings. When asked to guess what an amount would be worth in real terms in 20 years’ time, assuming a low inflation rate of 2%, just over a third selected the correct figure from a list of five options. Swiss respondents were the most financially-literate, with 42% picking the right answer.
“Pension savers face an uncertain landscape including inflation risk, volatility and the challenges posed by reform processes,” wrote Nick Smith, AGI’s head of European retail sales (ex-Germany).
“These are forcing people to adapt to changing situations. People saving for pensions need to look at what lessons can be learned from the 50+ generation, especially as the last decade has shown that it is a difficult task to factor in the various investment risks.”
The findings of the AGI survey tally with a similar poll by M&G. As Expert Investor Europe reported, consumers across Europe expect inflation rates well above the levels targeted by central banks.
A copy of Preparing for Retirement – Financial Strategies of the Affluent 50+ Generation in European Countries can be downloaded from Allianz’s Project M website, here.