Despite an uncertain market environment, staggering day-to-day costs, and an ambiguous job market, Americans remain in good spirits when it comes to their retirement.
New research from State Street Global Advisors (SSGA) finds the majority (84%) of over 3,500 respondents anticipate fully retiring (59%), while others envision a future of partial work (25%). The 2022 Global Retirement Reality Report showed a slight uptick in optimism regarding financial preparedness aimed for retirement, with a rebound of two points in 2022 to 29%, surpassing the pandemic decline and topping 2018 numbers.
It wasn’t all good news, however. Respondents reported a 10-point decrease in their neutrality of sufficient income for retirement, and pessimism sentiments reported an eight-point increase in 2022. Even for those who don’t anticipate retiring in the future, some (6%) said they were eager to work while a few more (10%) said retiring was not financially feasible for them.
Despite the retirement insecurity among several, the research saw a surge in retirement savings contributions and a decrease in those reducing or terminating savings. SSGA connects this increase in savings to curtailed spending during the COVID-19 pandemic, government stimulus checks, and an emergency savings-oriented mindset among workers during the crisis.
Over a third of respondents said they increased their retirement contributions in 2022 (34%), and others sought financial advice (14%) or switched to lower-risk investments (14%). Almost half of respondents changed the frequency in checking account balances—either more often (35%) or less (17%).
The increase in contributions stood consistent to data reported by SSGA. The investment management firm found that balance-checking and seeking financial advice doubled since May 2020, from 17% to 35% and 7% to 14%, respectively.
Another stark finding from SSGA’s research was Americans’ understanding of retirement income for later years. Almost half (48%) of respondents connected retirement income to Social Security, while 32% described it as a plan devised by their financial advisor and them to transition retirement savings into spending. Ten percent defined retirement income as an annuity.
Still, respondents believe their employer-sponsored retirement savings plan will be their prime vehicle (73%) in retirement income, followed by Social Security (53%), and personal savings (32%). Others believe part-time work (14%) will be their main source of retirement income, suggesting many may be considering it as a backup option in retirement.
As a result, SSGA projects a greater focus on spending and saving for retirement, considering the growing attention to retirement contributions and portfolio risk management.
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Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
