Faced with inflation and a sharp increase in the cost of living, half of U.S. adults opted to pause saving for retirement at some point in 2022, according to a new national survey from U.S. News & World Report’s 360 Reviews.
The high number of Americans choosing to slow their retirement saving efforts was among the notable findings of the survey, which explored the retirement saving practices and perspectives of 2,000 U.S. adults who had saved for retirement for more than five years.
Among the other more eye-opening findings in the “Retirement and Inflation Survey” was that 32% of U.S. adults said they had to withdraw some of their retirement savings last year to keep up with rising expenses and 41% of those surveyed said they have stopped contributing to retirement funds such as 401(k) accounts and IRAs, missing out on key savings opportunities. Both steps could have serious long-term effects on their available savings when they reach retirement age.
The survey also demonstrated how strongly the COVID-pandemic has affected the retirement mindset of Americans. Of those surveyed, 72% said the pandemic made them reevaluate their retirement plans, including 27% who said they had “greatly” 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 those surveyed reported losing sleep last year worrying about their retirement savings.
“The survey data shows a clear correlation between the rise of inflation and Americans’ delayed or altered retirement plans,” said Scott Nyerges, senior insurance editor, 360 Reviews, in a press release. “Americans continue to worry about the future repercussions of the COVID-19 pandemic.”
Although the survey demonstrated 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 does remain among the public,” Nyerges said.
Still, those 57% that believe the economy will improve this year were tempered in their enthusiasm, as only 13% thought the economy would be much stronger. In addition, long-term retirement-related worries were rampant among those surveyed. Many have concerns about the prospect of recession, including 82% saying they worry about a future recession affecting their retirement plans and savings.
The 360 Reviews report on the survey noted that the difficult economic conditions are occurring against a backdrop of uncertainty regarding Social Security. The 2022 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, released in June, predicted that Social Security retirement funds will be depleted by 2034 without changes to the program. Of those surveyed by 360 Reviews, 74% expressed confidence that they understood how Social Security works.
Those surveyed held a dim view of the future of retiring “on schedule.” In particular, 79% of those polled said millennial Americans (born between 1981 and 1996) will not be able to retire until after age 65, while 80% said the same about Generation Z (born between 1997 and 2012). Ultimately, 88% believe the generation that comes after theirs will find retiring by age 65 to be more difficult than for their own generation. In addition, 65% expect that they will have to work after retirement to supplement their retirement income.
The survey also polled Americans on their view of the current state of the “American Dream,” as defined by 360 Reviews as owning a home, being debt-free and retiring comfortably. The results show that Americans see attaining this dream becoming increasingly difficult. Approximately 59% of respondents say those three big goals are accessible for their generation, but only 48% believe it will be attainable for the generation that follows them.