Faced with inflation and a steep rise in the cost of living, half of American adults will choose to put retirement savings on hold at some point in 2022, according to a new national survey from 360 reviews from US News & World Report.
The high number of Americans choosing to slow down their retirement savings efforts is among the notable findings of the survey, which explored the retirement savings practices and prospects of 2,000 American adults who had saved for retirement. for more than five years.
Among the other most telling findings of the Retirement and Inflation Survey, 32% of American adults said they had to withdraw some of their retirement savings in the past year to meet rising expenses and 41% of respondents said they stopped contributing to retirement funds such as 401(k) accounts and IRAs, missing out on key savings opportunities. Both of these measures could have serious long-term effects on their available savings when they reach retirement age.
The survey also demonstrated how the COVID pandemic has affected Americans’ mindset toward retirement. Of those surveyed, 72% said the pandemic has caused them to reassess their retirement plans, including 27% who said they have “largely” reassessed their strategies and goals. Between the lingering effects of the pandemic, a year of investment losses and the rising cost of living, 57% of respondents said they lost sleep over the past year worrying about their retirement savings.
“The survey data shows a clear correlation between rising inflation and Americans’ delayed or modified retirement plans,” said Scott Nyerges, Insurance Editor, 360 Reviews, in a press release. “Americans continue to worry about the future repercussions of the COVID-19 pandemic.”
While the survey showed that many Americans struggled with the retirement planning climate in 2022, it also showed that they believe the landscape will improve in the new year.
“With 57% of respondents believing the economy will be stronger by the end of 2023 and 61% believing their personal retirement situation will improve in 2023, optimism remains among the public,” Nyerges said. .
Still, the 57% who believe the economy will improve this year were tempered in their enthusiasm, as only 13% thought the economy would be much stronger. Additionally, long-term retirement concerns were rampant among respondents. Many are worried about the prospect of a recession, with 82% saying they are worried about a future recession affecting their retirement plans and savings.
The 360 Reviews report on the survey noted that the tough economic conditions are occurring amid uncertainty about Social Security. The 2022 annual report of the Board of Directors of the Federal Old Age and Survivors’ Insurance and Disability Insurance Trust Funds, released in June, predicted that Social Security retirement funds would be exhausted by 2034 without modification of the program. Of those polled by 360 Reviews, 74% said they understood how Social Security works.
Respondents had a gloomy view of the future of ‘on schedule’ retirement. In particular, 79% of respondents said that American millennials (born between 1981 and 1996) will only be able to retire after age 65, while 80% said the same about Gen Z. (born between 1997 and 2012). Ultimately, 88% think the generation after them will find it harder to retire at age 65 than theirs. In addition, 65% expect to have to work after retirement to supplement their retirement income.
The survey also asked Americans about their view of the current state of the “American dream,” as defined by 360 Reviews as owning a home, debt-free, and retiring comfortably. The results show that Americans are finding it increasingly difficult to achieve this dream. About 59% of respondents say these three big goals are attainable for their generation, but only 48% believe they will be achievable for the next generation.