Without Pay Raises, Americans See Peril of Living on a Fixed Income
MINNEAPOLIS–(BUSINESS WIRE)–In order to help address the risks caused by inflation, many Americans
are looking to financial products that not only provide guaranteed
income in retirement, but also offer the opportunity for their income to
increase, according to a new study* by Allianz Life Insurance Company of
North America (Allianz Life®) that explores Americans’
perceptions of the rising cost of living. While eight out of 10
respondents expressed interest in a product that offers income for life,
an even higher percentage (86%) said they had interest in a product that
offered guaranteed income for life plus the opportunity for income to
increase over time.
Similarly, when presented with two options for guaranteed income – one
that pays a higher income rate to start but has no opportunity to
increase over time and one that starts with a lower income rate but
offers the possibility of increases – more than three-quarters (77%)
indicated an interest for the increasing income option. Furthermore,
half (50%) of respondents said they feel that it is “very” or “extremely
important” for a product to offer the possibility for income increases
“Our study revealed that many people depend on an annual pay raise to
cover various increasing expenses and even build long-term savings,”
said Allianz Life Vice President of Consumer Insights Katie Libbe.
“Consumers facing retirement will need to explore options that create a
similar income strategy by using a portion of their portfolio to obtain
guaranteed income for life with the chance for increases.”
Without Pay Raises, Rising Costs Bring Panic
Annual pay increases are an important part of maintaining financial
security for many Americans. In fact, more than two thirds (67%) of
those surveyed said they received a pay raise at least half of the time
during their working years. Yet, if faced with a frozen income that
offered no chance for an increase in annual salary, 53% said they would
be very worried or even panicked as to how they would pay for everyday
Considering the critical role pay raises can play in a person’s ability
to manage rising costs as they work, this scenario provides a compelling
glimpse into the situation faced by many retirees living on a fixed
income. In addition to expressing concern that inflation will affect
their overall retirement plans, when asked how they expect the rising
cost of living will affect their retirement lifestyle, nearly one-third
(28%) of those surveyed said they worry that they won’t be able to pay
for the essentials including basic needs such as housing, food and
medical care. This was an even greater concern for those with a lower
income as 41% of people earning less than $50,000 indicated they would
worry about paying for essentials.
“Clearly, there is strong consumer appetite for both guaranteed income
and increasing income solutions in retirement,” adds Libbe. “It’s
important that these benefits are available so Americans can have more
confidence in their ability to manage rising costs when pay increases
are no longer an option.”
Delivering on Increasing Income
Recent research on Allianz Life annuities that offer income benefits –
either built-in or through an optional rider at an additional cost –
provides evidence that those products have delivered income increases to
On average, income from Allianz Life fixed index annuities not only
helped address inflation, but purchasing power actually increased over
93% of clients who are receiving income from these fixed index
annuities received an increase.
- 67% percent of these clients received a payment increase every year.
For more information about the increasing income potential available
through Allianz Life fixed index and variable annuity products, visit www.allianzlife.com/annuities/increasing-income-potential.
About Allianz Life Insurance Company of North
Life Insurance Company of North America, one of FORTUNE’s 100 Best
Companies to Work For in 2016, has been keeping its promises since 1896.
Today, it carries on that tradition, helping Americans achieve their
retirement income and protection goals with a variety of annuities and
life insurance products. In 2015, Allianz Life provided a total of $2.4
billion in benefit payments that supported policyholders’ financial
objectives. As a leading provider of fixed index annuities, Allianz Life
is part of Allianz SE, a global leader in the financial services
industry with 142,000 employees in more than 70 countries worldwide.
More than 85 million private and corporate customers rely on Allianz
knowledge, global reach, and capital strength to help them make the most
of financial opportunities.
*The Allianz Life 2016 Inflation Study was conducted by Ipsos via their
eNation Online Omnibus in March 2016. The survey was completed via
Ipsos’ iSay/Amario Panel with 1,005 U.S. adults age 18+, and was
commissioned by Allianz Life.
** Past income increases are not a guarantee of future income increases.
Allianz Life Insurance Company of North America