Inflation Forcing Many Americans To Forego Retirement Savings, Study Says

The rising costs of everyday expenses has forced Americans to halt, cut back and dip into their retirement savings, and many believe that a recession is right around the corner, according to a study by Allianz Life.

The 2022 Q3 Quarterly Market Perceptions Study found 62% are worried that a major recession is near, a concern that has consistently been higher throughout 2022 compared to 2021. The fear, the study noted, is driven by world tension (78%) and that midterm elections will cause more market volatility (70%).

Most respondents (71%) said they are keeping some money out of the market to protect it from loss, a number that has been steadily increasing over the past year, the study found. But it also found that the number of Americans who are ready to invest increased from 17% last quarter to 26% in the third quarter. Millennials, it said, are more likely to feel comfortable with current market conditions and are ready to invest (40%) than Gen Xers (26%) and Baby Boomers (15%).

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And while 67% of respondents are nervous about investing, there also is the fear of missing out on a recovery, the study said. And again, it is millennials (76%) who are more in agreement with this sentiment than Gen Xers (66%) and boomers (59%).

Meanwhile, four in five respondents are anxious about the negative impact that rising inflation will continue to have on their purchasing power in the next six months. The study also noted that four in 10 (43%) respondents have had to dip into their retirement savings because of rising inflation.

Further, fully three-fourths of respondents are concerned that the rising cost of living will affect their retirement plans. In fact, 54% said they have stopped or reduced retirement savings due to inflation. That includes 65% of millennials, 40% of boomers and 59% of Gen Xers.

“Inflation is not going away tomorrow,” Kelly LaVigne, vice president of consumer insights, Allianz Life, said in a statement. “While we all hope that the pace of inflation will slow, it will take time to moderate. Consumers need to prepare themselves by talking to a financial professional and incorporating some ways to help fight the effects of inflation into their portfolio so that long-term inflation doesn’t affect retirement,” she said.

The study also found that 78% of respondents believed guaranteed lifetime income option such as an annuity is a viable retirement strategy that would ease concerns about inflation.

The 2022 Q3 Quarterly Market Perceptions Study was conducted online in September and included 1,004 respondents aged 18 and older.

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