Maintenance: The SOA will be performing scheduled maintenance of our Actuarial Directory and Explorer servers on Thursday, April 25th, 2024 from 5:00 AM to 9:00 AM CT.

Edition

The Impact of Inflation on Retirement

Background and Purpose

Inflation in the U.S. has dramatically increased over the past year at its fastest pace in more than 40 years.  Soaring costs for food, gasoline, housing and other necessities are impacting the buying power of American consumers and at the same time, effectively reducing or negating pay raises that many workers have received. Experts cite causes for price increases including gridlocked supply chains, high consumer demand throughout the pandemic and disruptions to global food and energy markets worsened by geopolitical risks.

The latest U.S. government economic figures reinforce expectations of continued high rates of inflation, increased interest rates and possible slower growth and even a recession. As a result, financial market pundits are anticipating much steeper rate hikes this year than experienced in recent years which will drive other emerging economic issues. Clearly, these factors taken together point to a moving target of what to anticipate over the coming months and the duration of this remarkably steep inflation.

Given the current situation, there is no doubt that many retirees, especially those living primarily on fixed incomes, will feel the impact of these trends in both direct and indirect ways, at least in the short term. Those approaching retirement may also need to adjust their savings and possibly their work expectations and planning. In light of this environment, the Society of Actuaries (SOA) Research Institute’s Aging and Retirement Strategic Research Program is interested in an examination of the impact of inflation on various aspects of retirement.  

Given both the immediate and long-term importance of this topic, the Institute is simultaneously issuing both a call for essays and request for research proposals. The dual objectives of this effort are to:

  1. Publish a collection of essays that represent a broad range of perspectives on these issues.
  2. Sponsor a research project that provides an in-depth and expanded view on a topic related to these issues.

The next section of this document describes sample topics of interest for both the call for essays and request for proposals. 

Submission requirements for essays and proposals are described in the subsequent sections.

Sample Topics of Interest

The SOA Research Institute seeks essays and proposals to explore the impact of inflation on retirement and retirement-related issues.  With the impact of inflation having wide-ranging reach, this invitation has been deliberately written to allow respondents the flexibility to address this topic from one or more perspectives and approaches. Respondents are free to choose from one or more of the following sample topics below or propose others that fall within the scope of this issue. Sample topics include:

  • What impact will inflation have on retirees and worker’s investment choices for retirement? Will inflation drive more investors with defined contribution plans into fixed interest investment products, rather than contending with financial market swings? Will such movement be temporary or permanent? What other investment decisions might workers and retirees consider as a result of the high rates of inflation?
  • What lessons can be learned in a retirement context from previous periods of high inflation?
  • How might rising interest rates impact retirees? How might the annuity market be impacted?
  • To what extent will the role of Social Security grow in importance as a result of declining retirement savings portfolios? In what ways might Social Security funding be affected and may eventually lead to changes in the program such as how benefits are indexed? How will inflation impact the timing of initially claiming Social Security benefits?
  • What types of insurance product innovations in a retirement context might address high inflation?
  • How will this period of high inflation impact retirees differently if it is transitory rather than a long-term inflationary environment? What effects will be temporary? What will be long-lasting?
  • How does the impact of inflation vary for retirees at differing ages, stages of retirement and/or income levels? How will that vary if steep inflation lasts 1 year, 5 years, or much longer?
  • How can employer financial-wellness programs help guide employees and retirees through this period? Similarly, how can financial advisors react effectively?
  • To what extent are target date funds well positioned for inflation? How do their investments align with current inflation trends?
  • What could be the impact of inflation on the overall structure of either the public or private retirement system (or both) and, in particular, the future of defined benefit plans?
  • What new issues may arise for investing within defined contribution plans in a high-inflation environment?
  • How will inflation impact older workers and those recently retired? For example, will people work longer, return to the labor force, or make other job changes?
  • How will increased housing costs and mortgage rates affect retirees? Will it lead to more intergenerational households including retirees? Will more new home buyers be priced out of the market? If so, how will this impact their eventual retirement? Will the reverse mortgage market be affected? Will other mortgage products be developed to serve retirees in a high inflation environment?
  • How will the tax treatment of investment earnings specifically impact retirees? To what extent, will retirees feel an additional burden from the way the tax system treats investments?
  • How many retirees are mostly dependent on income that is fixed or that grows with “COLAs” that are not tied to inflation?

Note that the list above is not meant to be exhaustive but merely examples of proposed topics that may be considered.

Rules for Submission of Essays

Timeline

The deadline for submissions is October 31, 2022. Essays will be published as soon as possible in a formal collection later in the year.

Length and Instructions for Submission

Essays must be submitted in English with a desired length of between 500 to 2,500 words. There is no requirement for formal or extensive footnoting.

Author information must be submitted with the essay and include name; credentials or designations (if appropriate); title; organization/company; e-mail address; and phone number. Please provide all author information at the beginning of the essay. 

Essays that contain any overt political statements, commercial content, and other inappropriate material will not be accepted. Articles must comply with the SOA's antitrust guidelines.

Please submit your essay via e–mail to:

Barbara Scott, Sr. Research Administrator 
Society of Actuaries 
e–mail: bscott@soa.org

Awards

$10,000 in award money has been allocated for this call for essays. The review committee will select the leading essays and determine how to allocate the award money among them. Consideration will be given to creativity, originality and the extent to which an idea might help promote further thought in this area.  In exchange for award money, selected authors will be required to assign all copyrights in their essays to the Society of Actuaries Research Institute.

Authors are ineligible for awards if an essay is based on an Institute-sponsored and funded research study conducted by the author. However, authors are welcome to submit such essays for publication consideration.

Publication and Presentation

Depending on how many essays are received and the range of the topic areas, a suitable format for electronic publication and dissemination will be selected.  Essays may also be presented at an SOA meeting, webcast, or other professional development event.

In addition, other venues for publication or presentation of the ideas outside of the Institute will be considered. It is hoped that publication of the collected essays will further knowledge and stimulate discussion as well as promote future efforts in this area. 

Rights Granted

Please understand that by submitting an essay for consideration, the essay author(s) is granting to the Society of Actuaries Research Institute an unlimited license to print or republish their essay, with proper attribution given to the author(s).  

Questions

Please direct any questions regarding this Call for Essays to:

Steven Siegel, Sr. Research Actuary 
Society of Actuaries 
e–mail: ssiegel@soa.org

Rules for Submission of Research Proposals

Proposal Requirements

To facilitate the evaluation of proposals, the following information should be submitted:

  1. Resumes of the researcher(s), including any graduate student(s) expected to participate, indicating how their background, education and experience bear on their qualifications to undertake the research. If more than one researcher is involved, a single individual should be designated as the lead researcher and primary contact. The person submitting the proposal must be authorized to speak on behalf of all the researchers as well as for the firm or institution on whose behalf the proposal is submitted.
  2. An outline of the approach to be used (e.g. literature search, model, etc.), emphasizing issues that require special consideration. Details should be given regarding the techniques to be used, collateral material to be consulted, and possible limitations of the analysis.
  3. A description of the expected deliverables and any supporting data, tools or other resources.
  4. Cost estimates for the research, including computer time, salaries, report preparation, material costs, etc. Such estimates can be in the form of hourly rates, but in such cases, time estimates should also be included. Any guarantees as to total cost should be given and will be considered in the evaluation of the proposal. While cost will be a factor in the evaluation of the proposal, it will not necessarily be the decisive factor.
  5. A schedule for completion of the research, identifying key dates or time frames for research completion and report submissions. The ARSRP is interested in completing this project in a timely manner. Suggestions in the proposal for ensuring timely delivery, such as fee adjustments, are encouraged.
  6. Other related factors that give evidence of a proposer's capabilities to perform in a superior fashion should be detailed.

Selection Process

The SOA Research Institute will appoint a Project Oversight Group (POG) to oversee the project.  The Institute is responsible for recommending the proposal to be funded. Input from other knowledgeable individuals also may be sought, but the Institute will make the final recommendation, subject to Society of Actuaries Research Institute (SOA) leadership approval. A staff research actuary will provide staff actuarial support.

Questions

Any questions regarding this RFP should be directed to Steven Siegel, SOA Research Institute Sr. Research Actuary at ssiegel@soa.org or 847-706-3578.

Notification of Intent to submit Proposal

If you intend to submit a proposal, please email written notification by August 31, 2022 to Barbara Scott at bscott@soa.org.

Submission of Proposal

Please email your proposal to Barbara Scott at bscott@soa.org; proposals must be received no later than September 30, 2022.

The selection of a proposal is conditioned upon and not considered final until a Letter of Agreement is executed by both the Society of Actuaries Research Institute and the researcher.

The Society of Actuaries Research Institute reserves the right to not award a contract for this research. Reasons for not awarding a contract could include, but are not limited to, a lack of acceptable proposals or a finding that insufficient funds are available. The Society of Actuaries Research Institute also reserves the right to redirect the project as is deemed advisable.

The Society of Actuaries Research Institute plans to hold the copyright to the research and to publish the results with appropriate credit given to the researcher(s).

The Society of Actuaries Research Institute may choose to seek public exposure or media attention for the research. By submitting a proposal, you agree to cooperate with the Society of Actuaries Research Institute in publicizing or promoting the research and responding to media requests.

The Society of Actuaries Research Institute may also choose to market and promote the research to members, candidates and other interested parties. You agree to perform promotional communication requested by the Society of Actuaries Research Institute, which may include, but is not limited to, leading a webcast on the research, presenting the research at an SOA meeting, and/or writing an article on the research for an SOA newsletter.