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Yahoo
20-05-2025
- Business
- Yahoo
Inflation remains the top worry for retirees, with 92% fearing their assets are being eaten away
Though inflation has been cooling in recent months, it's not enough to assuage the fears of retirees, almost all of whom are worried about spending down their savings sooner than planned. And as they stare down the possibility of higher prices linked to President Donald Trump's wide-reaching tariff policies and a possibly lower Social Security cost-of-living adjustment, those fears could intensify. That's according to asset manager Schroders 2025 U.S. Retirement Survey, which finds that 92% of retirees report they are worried about inflation lessening the value of their assets, up from 89% last year and the top concern listed. Some 45% of respondents report their expenses in retirement are higher than they expected. 'Improving inflation data has not eased the fears of retirees,' says Deb Boyden, head of U.S. defined contribution at Schroders. 'Rising prices on essentials like housing, food, and healthcare have significantly diminished the purchasing power and financial security of retirees.' Relief, at least in the near term, looks unlikely. Inflation is threatening to rear its head again as economists warn of the after-effects of the Trump administration's current tariff policies. Though it's too soon to say exactly what the policies will end up being—including how high they will go, what countries they will be applied to, and to what goods—the imposed and scheduled tariffs could lead average tax increase of $1,190 in 2025 and $1,462 in 2026 on the average U.S. household, according to the right-leaning Tax Foundation. Indeed, stores like Walmart have already warned about higher prices to come. That could stretch already thin budgets to the brink. Many near and current retirees, particularly on the lower end of the income spectrum, have a retirement savings gap, or a difference between what they have saved for their post-work life and what they will likely need. About 70% of all baby boomers who have yet to retire may not being able to replace their preretirement lifestyle, according to Vanguard. 'Given the uncertainty surrounding potential tariffs, retired Americans are understandably worried about the impact of rising prices on their savings,' says Boyden. 'This widespread concern offers a cautionary tale for younger generations: the sooner you start planning and saving for retirement, the more likely you'll be able to fully enjoy your golden years.' For those who are already retired, inflation can be particularly onerous because many are living on a fixed income, and a growing share of seniors are living in poverty in the U.S. Social Security benefits make up 31% of the income of people over age 65, and nearly 9 in 10 Americans age 65 or older were collecting Social Security at the end of 2024. And the annual Social Security cost-of-living adjustment (COLA) is not likely to make up much of the difference. Though the rise will be officially reported in October, the nonpartisan advocacy group The Senior Citizens League is estimating it will be around just 2.3% next year. If tariffs do increase inflation more over the next few months, that COLA could grow, the organization says. The COLA is calculated based on the Consumer Price Index for Urban Wage Earners and Clerical Workers in the third quarter of each year. This year, the COLA was 2.5%, down slightly from 2023's 3.2% and significantly from the pandemic-fueled height of 8.7% in 2022. One reason tariffs could be particularly harmful to retirees is because of the potential for drug prices to spike. The U.S. imports drugs from countries including Canada, China, India, and Mexico, all of which have had higher import taxes placed on them by the Trump administration. The U.S. imported $213 billion worth of drugs in 2024. 'Placing broad-based tariffs on goods from numerous countries could have a profoundly negative impact on the daily lives of seniors, including the costs of drugs and medical equipment that many seniors rely on,' says Shannon Benton, executive director of the Senior Citizens League. 'It is also highly likely that import taxes will keep food prices high, increase auto insurance costs, and contribute to higher inflation, among other effects.' Tariffs could backfire particularly when it comes to generic drugs, which account for 90% of U.S. prescriptions, according to a story published in the Harvard Business Review by Marta E. Wosińska, senior fellow at the Center on Health Policy at the Brookings Institution, and David Blumenthal, professor at the Harvard T.H. Chan School of Public Health. These are far more affordable than name-brand drugs for many people, but they also have much smaller margins for manufacturers. Many are produced in India, and it is unlikely that manufacturing would be moved to the U.S., the authors write. 'What is more likely is that we will see foreign generic manufacturers leave the U.S. market because of low profit margins combined with their inability to pass through the costs of tariffs to buyers,' Wosińska and Blumenthal write. 'Over the long term, tariffs may also increase the prices of branded drugs, which consumers already find unaffordable in many cases.' And seniors are already struggling with their health care costs in retirement—86% say they are higher than expected, according to the Schroders survey, which eats away at savings. Though Trump signed an executive order on May 12 aimed at lowering drug prices—prescription drug prices are two to three times higher in the U.S., on average, than they are in other developed nations—the policy would be 'challenging to practically implement,' because it likely requires an act of Congress, JPMorgan analysts wrote in a note following the announcement. This story was originally featured on
Yahoo
20-05-2025
- Business
- Yahoo
Inflation Still Weighs Heavily on Retirees
Schroders' Retirement Study Reveals 62% Don't Know How Long Their Money Will Last NEW YORK, May 20, 2025--(BUSINESS WIRE)--While the impact of tariffs on inflation remains to be seen, Schroders 2025 US Retirement Survey reveals a growing number of retired Americans are worried about the impact of rising prices on their savings. Just two in five retirees (40%) believe they have saved enough money for retirement, nearly half (45%) report their expenses in retirement are higher than they expected, and most (62%) admit they have no idea how long their savings will last. The top five concerns plaguing retired Americans in 2025 include (% at least slightly concerned): Inflation lessening the value of assets (92% - up from 89% in 2024) Higher than expected healthcare costs (86% - up from 85%) A major market downturn significantly reducing assets (80% - up from 76%) Not knowing how to best take retirement income and/or draw down assets (71% - up from 69%) Outliving assets (70% - up from 68%) Notably, 84% of retired Americans wish they could better protect their savings from the effects of inflation. "Rising prices on essentials like housing, food, and healthcare have significantly diminished the purchasing power and financial security of retirees," said Deb Boyden, Head of U.S. Defined Contribution at Schroders. "The uncertainty that's currently plaguing so many retirees is a poignant reminder of the value of proper planning, products and personalized advice for a comfortable retirement." With higher-than-expected healthcare costs top of mind, retirees report spending an average of 15% of their total monthly income on healthcare costs such as insurance premiums, prescription costs, and out-of-pocket expenses. More than half of all retirees surveyed (58%) said that they expected Medicare to have covered a greater portion of their healthcare expenses. Nearly One-in-Five Retirees "Struggling" or Worse Amid rising costs, economic uncertainty and financial woes, the percentage of retirees who are concerned that financial stress will impact their overall health, ticked higher from 33% in 2024 to 36% in 2025. Notably, one-in-four retirees (25%) say they have lost sleep worrying about their financial situation, and 27% spend an hour or more per day worrying about money. When survey participants were asked to describe their financial situation, their responses revealed the toll insufficient savings has on a significant portion of retirees: 5% say they are "living the dream" 37% are "comfortable" 39% are "not great but not bad" 16% are "struggling" 3% are "living the nightmare" Despite the financial challenges and stress impacting many retired Americans, 64% don't work with a professional financial advisor, and 44% don't have a plan in place for estimating expenses, determining how much income is needed, and developing an investment strategy to meet their goals. "The path to closing the retirement savings gap is paved with better planning, products, and access to advice," said Boyden. "As pension plans continue to be replaced by defined contribution plans like the 401k, the importance of being proactive in saving and planning for retirement can not be overstated. It's one of the greatest challenges and opportunities facing plan participants and the firms striving to provide solutions that can improve their retirement readiness." About the Survey The Schroders 2025 US Retirement Survey was conducted by 8 Acre Perspective among 1,500 US investors nationwide ages 29-79, including 373 retired Americans. The survey was conducted from March 25 to April 17 in 2025. For more information on the Schroders 2025 U.S. Retirement Survey, visit here. Note to Editors To view the latest press releases from Schroders, visit: Newsroom - Media Relations - Schroders Schroders plc Schroders is a global investment manager which provides active asset management, wealth management and investment solutions, with £778.7 billion (€941.8 billion; $975.3 billion) of assets under management at 31 December 2024. As a UK listed FTSE100 company, Schroders has a market capitalization of circa £6 billion and over 6,000 employees across 38 locations. Established in 1804, Schroders remains true to its roots as a family-founded business. The Schroder family continues to be a significant shareholder, holding approximately 44% of the issued share capital. Schroders' success can be attributed to its diversified business model, spanning different asset classes, client types and geographies. The company offers innovative products and solutions through four core business divisions: Public Markets, Solutions, Wealth Management, and Schroders Capital, which focuses on private markets, including private equity, renewable infrastructure investing, private debt & credit alternatives, and real estate. Schroders aims to provide excellent investment performance to clients through active management. This means directing capital towards resilient businesses with sustainable business models, consistently with the investment goals of its clients. Schroders serves a diverse client base that includes pension schemes, insurance companies, sovereign wealth funds, endowments, foundations, high net worth individuals, family offices, as well as end clients through partnerships with distributors, financial advisers, and online platforms. Important Information: All investments involve risk, including the loss of principal. The views shared are those of the author or individual quoted and may not reflect the views of Schroders Plc or any of its affiliates. This content is for informational purposes only and should not be interpreted as investment guidance. Schroder Investment Management North America Inc (SIMNA Inc.), SEC registered investment adviser, CRD Number 105820. View source version on Contacts For further information, please contact: Jennifer ManserHead of Communications & Business Management, North
