After making all the right moves to prepare for retirement, high-net-worth individuals could still dilute their quality of life if they skip buying inflation-indexed annuities with their retirement assets, according to a study released by the National Retirement Risk Index at the Center for Retirement Research at Boston College.

Nationwide Mutual Insurance Co. sponsored the study, which measured the share of American households that are considered at risk of being unable to maintain their pre-retirement standard of living in retirement.

The company looked at three scenarios—drawing down assets at the industry standard 4% annually, live off of the interest generated at 1.9%, or annuitization—and released the results on Tuesday. The analysis found that 47% of HNW households could diminish their standard of living in retirement, if they drew down their assets at the industry standard 4%. For those who lived off of about 1.9% interest income generated from their retirement pool, the amount rose to 57%.

For households that annuitized their assets, the ratio of those whose standard of living could slip post-retirement was 42%.

Overall, 60% of all households in the study were found to be “at risk” for lowering their lifestyles should they live off of the interest income from their accumulated assets. For those who drew down 4%, the impact was less, at 53%. That compares with 51% of all households that could backslide in their living standards even if they bought annuities.

Clearly, the study found that buying annuities would not completely insulate all clients from being unable to maintain their pre-retirement standard of living after quitting work. Still, Nationwide believes the NRRI analysis makes yet another argument for the benefits of annuities and guaranteed streams of income in retirement.

“All audiences should pay attention, but the risk is certainly more acute for high-net-worth individuals,” Brad Davis, vice president of retirement income solutions at Nationwide Financial Services said of HNW households said.

It is a salient point that advisors should bring up with clients in that category, according to Davis. “They are more likely to depend on their retirement assets to generate the income they need,”

The study assumed that people would work until age 65, receive income from reverse mortgages, and annuitize all of their financial assets upon retirement.

The risk of diminishing a household’s standard of living is less acute for lower-income households, especially, which typically depend on Social Security income for most of their retirement income. For middle-income households, however, the percentage of households “at risk” of lowering their standard of living was 56% if they lived on the interest income; 49% if they drew down 4% per year; and 47% if they annuitized their income.

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