As we enter the new year, Americans’ views of their financial health are languishing, and many consumers don’t feel confident about their current financial situation or the economy according to a new annual 2022 Wealth & Wellness Index released today from Empower Retirement and affiliate hybrid wealth manager Personal Capital.
The index found only 34% of American consumers surveyed say they are “very financially healthy,” a 14% drop versus when asked in March of 2021 (48%). The survey, conducted by the Harris Poll, finds economic confidence among respondents also remains relatively low at 40%, down 2% from one year prior and down 12% from the start of the pandemic.
“It’s a fact of life that forces in the economy are going to impact how confident people feel about their finances,” said Empower President and CEO Edmund F. Murphy III. “Periods like this represent opportunities for savers to become even more engaged in their finances and seek the advice they need to help reassure them in their financial plan or put them on a path to help drive renewed confidence.”
So, what’s causing many Americans to feel less confident in their finances and in the economy right now, despite positive indications at a macroeconomic level?
“It’s a complicated picture to describe what’s happening to the economy,” says Chief Investment Officer at Personal Capital, Craig Birk. “The labor market is strong and retail growth is ticking upwards, but we’re also dealing with recent market volatility and record high inflation. It’s unsettling for many.”
Despite this relatively recent decline in confidence, American consumers surveyed report feeling optimistic about their longer-term financial futures. According to the study’s key indicators of financial wellness, many are feeling hopeful and optimistic (40%) about their path towards optimizing their financial health.
Americans are also prioritizing financial goals in 2022. When asked what their top new year’s resolution is, paying off personal debt (37%) and saving for retirement (36%) now surpass traditionally common goals like exercising more (33%) and losing weight (28%).
“The fact that paying off debt is a higher priority than exercising shows many people want to improve their financial health, and it’s clear that financial confidence is intrinsically linked to overall health and wellness,” says Personal Capital’s Chief Marketing Officer, James Burton. “Americans are seeking financial advice, and we don’t see this boom in financial planning changing anytime soon. In the past year, we’ve seen an 88% increase in net new client assets, excluding market gains.”
For more information on the “2022 Wealth & Wellness Index,” see an overview of the results here.
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