Jhe Federal Reserve decreed an interest rate hike of 0.25% at its meeting this week to start tackling record high inflation, but it seems a long way to get back to reasonable levels, the Fed expecting several years to stabilize inflation around 2%.
How concerned are consumers about inflation? It turns out quite a bit, across all generations, according to a recent Nationwide poll. The survey polled 2,000 consumers across multiple generations and found nine in 10 said they were somewhat or very concerned about inflation.
Unsurprisingly, the youngest generation, Gen Z, reported the least concern, but even that was only by a small margin. Gen Xers have actually reported the greatest worry about inflation compared to their baby boomer counterparts, but all face very real fears about its impacts on income, retirement and purchasing power.
Image source: National Survey
The baby-boomer generation has seen its purchasing power decline the most, at 77%; this is likely due to the fact that they are the generation most dependent on fixed income and therefore feel the pressure the most. This older generation, as well as Generation X, who may have worked and spent during the last major period of inflation in the United States in the 1970s, also said they believed rising prices would be a long-term phenomenon.
So what kind of impacts does this have for younger generations who don’t yet have a fixed income but are feeling the pressure in their day-to-day spending? Inflationary pressures have translated for Gen Z consumers into largely delaying major life events such as buying a home, starting a family, and planning for retirement. All of these delays could have long-term financial implications and advisors should be aware of this when discussing retirement planning.
“For finance professionals, clients’ concerns about inflation can present opportunities to refine their financial plans. Generational differences and experiences can influence the challenges your clients face and the solutions that can help them 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 broader retirement plans.
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