A recent GOBankingRates survey of nearly 1,000 Americans found that nearly three-quarters (73.5%) say inflation is affecting their retirement plans in some way, from how they invest to when they plan to retire.
Per the survey, here are five significant ways inflation is changing how people are saving and planning for retirement.
1) Saving more
The most common response to inflation when it comes to saving for retirement is making an effort to save more, with 30% of Americans saying that they are now trying to put more money away in retirement accounts. This way of coping with inflation was particularly common among younger respondents, with 41% of those ages 18-24 and 33% of those ages 25-34 saying they are now trying to save more for retirement.
The survey also found that women are more likely than men to be making an effort to save more for retirement, with 32% of women vs. 27% of men claiming to be doing so.
2) Delaying retirement
Roughly one in five Americans approaching retirement (ages 55-64) who were surveyed (19%) said they are delaying their retirement plans due to inflation. Fortunately, GOBankingRates said this doesn’t seem to be the case for those who have already reached the traditional retirement age—only 6% of those ages 65 and older said they are delaying their retirement.
A new study from Nationwide Retirement Institute found four in 10 older workers are delaying their retirement due to inflation, and earlier this year, the BMO Real Financial Progress Index found inflation was causing 25% of Americans to delay retirement.
3) Changing investment strategy
More than one in 10 Americans said they are changing their long-term investment strategy to account for inflation. Younger respondents were most likely to change their retirement investment strategy, with 14% of Americans ages 18-24 and 13% of Americans ages 25-34 saying that they are making changes.
The survey also found that men were more likely to be changing their long-term investment strategy than women. Thirteen percent of men and 8% of women said they were making changes.
4) Working in retirement
Due to the recent uptick in inflation, the survey found 8% of Americans are now planning to work in retirement when they weren’t before. This response was most common among those 65 and older—those most likely to already be retired—with 14% saying they are now planning to work in retirement.
Recent research from the Transamerica Center for Retirement Studies found that almost six in 10 Americans plan to work at least part-time in retirement (58%), and one in four workers (24%) expect to retire later than planned because of the pandemic.
5) Moving somewhere cheaper
The survey found 5% of Americans are now planning to relocate somewhere more affordable because of inflation. This response was most common among those nearing retirement age, ages 55-64, with 7% saying they are planning to relocate to cut costs.
GOBankingRates points out that retiring to a place where living expenses are $40,000 a year compared to $50,000 a year could help a retirement nest egg of $800,000 last 25 years—or 6 years longer than living in a place where expenses are $50,000 (assuming a portfolio grows by 5% and inflation grows at 3%).
SEE ALSO: 2022’s 4 Most Affordable Places to Retire Overseas
Less than $50,000 saved
The same GOBankingRates survey also found that most Americans have less than $50,000 saved for retirement. The majority (36%) have less than $10,000 saved and an additional 27% have between $10,000 and $50,000.
Predictably, the survey found that those ages 25-34 are the most likely to have $10,000 or less saved for retirement, with 38% of this age group reporting that their retirement savings fell into this range. Among those ages 35-44 and 55-64, 37% have $10,000 or less; 36% of Americans ages 18-24 have $10,000 or less; 35% of Americans ages 45-54 have $10,000 or less; and 31% of those ages 65 and older have $10,000 or less.
On the plus side, those ages 65 and up were the most likely to have more than $750,000 saved for retirement, with 12% reporting they had reached this milestone compared to 4% of the general population. An additional 5% of seniors reported having between $500,000 and $750,000.
SEE ALSO:
• Most Americans Financially Unable to Retire at 65
• Fewer Americans Believe Retirement Savings Will Last Their Lifetime
• So Far, Retirement Crisis is a ‘No-Show’: Andrew Biggs
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
