Americans Remain Confident in Retirement Savings, Despite Market Uncertainty
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.
SEE ALSO:
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- Younger Workers More Ambitious Now Because They Want to Retire Early: Study
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with nearly a decade of experience and a passion for telling stories and reporting news. She is originally from Queens, New York, but now resides in Denver, Colorado.
