A recent Bankrate survey found that a bulk of American workers are behind on their retirement savings. The reason? Inflation, they say.
“Workers who are not contributing more to their retirement accounts this year overwhelmingly point to inflation as the reason why, and by more than a 2-to-1 margin over any other single response.”
Bankrate’s Greg McBride
Over half (55%) of Americans surveyed said they are having trouble keeping up with their retirement savings, with 54% citing inflation as a key reason for the delay. Thirty-five percent of those surveyed said they are “significantly behind” and 20% said they are somewhat behind on their retirement savings.
“Workers who are not contributing more to their retirement accounts this year overwhelmingly point to inflation as the reason why, and by more than a 2-to-1 margin over any other single response,” said Greg McBride, CFA, Bankrate chief financial analyst.
This number is a rise from the 52% of Americans who said they were behind on their goals in 2021, even though nearly three in five Americans are currently contributing the same or more than they were last year. The Bankrate survey also found that the number of Americans adding more to their accounts outpaces those who are contributing less.
Those who are falling short of their savings are also less likely to contribute to their retirement accounts than those who are on course with their goals, McBride said. “More than one-third of workers feel they are ‘significantly behind’ on their retirement savings. And those who already feel behind are twice as likely to be contributing less this year than workers who feel they’re on track or ahead of where they should be.”
Only about 20% of those surveyed said they were “right on track” with their retirement savings, while 8% felt they are “slightly ahead” and 7% said they are “significantly ahead” of their savings. Ten percent of the group surveyed said they do not know where they stand on their retirement goals.
This is despite more than a third of Americans (34%) who said they are adding “about the same” to their retirement accounts, 17% who are adding “slightly more” and 8% who are contributing “significantly more.” Only 16% said they are adding “slightly less” or “much less” compared to 2021, and 24% said they did not contribute this year or last year. Those who did not contribute to either year were generally found to be age 25 or younger, did not attend college or earned less than $50,000 a year, Bankrate reported.
Inflation not the only reason for delay
The state of the economy wasn’t the only reason why Americans haven’t contributed to retirement. In addition to inflation, Americans cite stagnant or reduced income (24%), new expenses (24%), debt repayment (23%), desire to keep more cash on hand (22%), and market volatility (18%), as the top reasons for the hold-up on contributing to their retirement savings.
Others said they do not want or need to increase their contributions (7%), while 7% said they do not know why they’re not contributing to retirement and 5% said “something else” was hindering their efforts to contribute.
Those in Generation Z (36%) and Millennials (31%) said their reasons for not contributing were “new expenses,” while only 15% of Generation X and 21% of Baby Boomers said the same.
Some said they would prefer to keep cash on hand: Gen Z at 35%, Millennials at 24%, Gen X at 19%, and Baby Boomers at 17%.
More insights from the study:
Baby Boomers tag behind all other generations in retirement savings:
- Gen Z: 31% reported behind ahead of savings with 30% behind
- Millennials: Nearly 19% said they are ahead and 46% are behind
- Gen X: 9% are ahead and 65% are behind
- Baby Boomers: 7% are ahead and 71% are behind
Higher salary does not mean more contributions:
- Almost half (46%) of those earning more than $100,000 said they are behind on retirement savings, while 23% said they are ahead
- Of those earning between $80,000 to $99,000, more than half (54%) are behind and 17% are ahead
- 59% of those with an income below $80,000 are behind in retirement savings, compared to 13% who said they are ahead
Conducted by Bankrate via YouGov., the survey sampled 2,312 Americans between September 21 to 23. Full insights from the study can be found here.
SEE ALSO: