All generations are significantly impacted by competing financial priorities and life events that have derailed the ability of many Americans to save for retirement.
“A majority of currently retired respondents also reported that they are living on less than 50% of their pre-retirement annual income.”
Goldman Sachs Asset Management
According to a new report from Goldman Sachs Asset Management, this “financial vortex” of challenges includes, but is not limited to, credit card debt, paying existing loans, saving for college, caring for and financially supporting family members, time out of the workforce, financial hardship and too many monthly expenses.
As a result, 53% of working Baby Boomers and 51% of Gen X respondents said they are behind in their retirement savings.
Furthermore, only 11% of working Baby Boomers and 12% of Gen X are “very confident” in meeting their retirement goals. Another 40% of working Baby Boomers and 32% of Gen X respondents are just “somewhat confident,” while 30% of working Baby Boomers and 40% of Gen X expressed concerns about meeting their goals.
However, younger generations have brighter outlooks: just 34% of Millennials and 27% of Gen Z respondents report being behind schedule in their retirement savings. Additionally, 31% of Millennials and 31% of Gen Z are “very confident” they will meet their retirement goals, while just 19% of Millennials and 12% of Gen X expressed concerns.
Almost four in 10 Millennials and 47% of Gen Z increased retirement savings over last year, while 32% of Baby Boomers and 33% of Gen X decreased theirs.
“The financial vortex is the new reality for retirement savers today,” Mike Moran, Senior Pension Strategist at Goldman Sachs Asset Management, said in a statement. “Some challenges are common life events, such as buying a home or starting a family, but market volatility and high inflation are beyond individual control.”
Pre-retirement income
The report also found that a majority of currently retired respondents reported that they are living on less than 50% of their pre-retirement annual income, including 29% who report living on 40% or less.
Most retirees reported their greatest concern currently as inflation (71%), followed by future health care concerns (51%), concerns about potential reductions in future US Social Security benefits (46%), and running out of money (44%). Each percentage has increased since the Retirement Survey & Insights Report 2021.
“Spending needs are primarily elevated due to high inflation, fixed income portfolios are under pressure due to rising interest rates, and equity portfolios have declined notably as the markets try to assess the impact of a potential recession,” Greg Calnon, Head of Multi-Asset Solutions at Goldman Sachs Asset Management, said. “We believe these challenges raise concern for retirees regarding how much they can spend and how long their savings will last.”