A trip to the gas pump or a particular grocery store aisle is all it takes to see inflation’s real time effect on the daily routine.
But future-thinking Americans also have a growing concern of being able to save enough for retirement.
Voya Financial released new findings capturing this angst by revealing that 66% of Americans agree or strongly agree that they are worried about the impact of inflation on their ability to save enough for retirement. And an even greater number of individuals agree or strongly agree they are worried about the impact of inflation on their personal finances and the ability to maintain their current lifestyle (71%).
One finding lays out the conflict between now and later: 84% of Americans feel like their money does not go as far as it used to go, leaving many to wonder how saving for the future can remain a priority.
Recently, the Bureau of Labor Statistics’ Consumer Price Index rose 8.5% in March compared to the same month last year, marking the fastest rise since December 1981 and following a 7.9% increase in February. The data also caused a quick recalculation of the estimated 2023 Social Security cost of living adjustment by the The Senior Citizens League increasing it from 7.6% 8.9%.
Gen X, Millennial retirement stress rises
The generational views about inflation are stark. About 73% of Millennials and Gen Xers (74%) agreed or strongly agreed that they are worried about the impact of inflation on their ability to save enough for retirement. And more than half (57%) of Millennials, who according to PEW Research make up one-third of the U.S. labor force, agree or strongly agree that, because of inflation, they will need to delay their planned retirement date.
As stressed are 55% of Baby Boomers and 62% of Gen Zers who agreed or strongly agreed that they are worried about the impact of inflation on their ability to save for retirement.
“The results of our latest consumer survey are an important reminder for employers that all generations, particularly those balancing the impact of competing financial priorities today, are feeling the impact inflation has on their ability to save for the future,” said Heather Lavallee, CEO of Wealth Solutions for Voya Financial.
Millennials feeling the heat
Often painted as a freewheeling generation, Millennials are definitely beginning to feel the heat. About two-thirds of Millennials agreed or strongly agreed that, because of inflation, they are not able to pay down debt as quickly as they want to — and even more (77%) agree or strongly agree that inflation has made them more aware of the need to save more for emergencies or unexpected events.
“Voya’s survey also found that, because of inflation, nearly half (43%) of individuals have had to tap into finances that they previously had set aside for retirement — and not surprisingly, this is even higher among millennials (57%),” noted Lavallee.
She also added that both employers and employees are increasingly looking at the value of benefits in relation to the total net outcome of individuals’ health and wealth needs.
“While a focus will always remain on driving greater outcomes for retirement, the realities of our world today require a shift in thinking about the opportunities to harmonize one’s entire savings picture,” observed Lavallee.
“Going forward, it will be critical for employers to provide support in these areas so these generations, and all individuals, can find greater opportunity to build a secure financial future.”
Lynn Brackpool Giles is a contributing editor to 401(k) Specialist. Giles is a former Managing Director of Communications and Consumer Services for the Financial Planning Association (FPA), where she oversaw all corporate, legislative, and consumer communications. In her current journalistic practice, she is a frequent contributor to numerous financial services industry publications.
