The effects of inflation may be felt for decades to come: Americans are hitting pause on retirement savings


Most of us are feeling the pain of inflation now, but the rising cost of almost everything may be impacting our future selves as well: People are cutting back on saving for retirement as a result of inflation. 

The majority of Americans say current financial issues are more pressing than preparing for the future. Two in three Americans (67%) say they are more concerned about paying bills right now than saving for their financial future, according to a new study from Allianz Life Insurance Co. of North America.

Inflation and reduced purchasing power is to blame. The vast majority (82%) of Americans say they are worried about rising inflation continuing to have a negative impact on the purchasing power of their income in the next six months, the study found.

Read: How long does your retirement savings need to last? First, learn how long you might live.

As a result, many retirement savers have hit pause. A majority of Americans (55%) say they have either stopped or reduced their retirement savings due to rising inflation. And 45% say they have had to dip into their retirement savings because of rising inflation.

“Reducing retirement savings should be a last resort, short-term answer for inflation because it could have a significant detrimental effect on financial security for years to come,” said Kelly LaVigne, vice president of consumer insights of Allianz Life. 

Read: What do older workers want? Most see flexible hours and remote work as nonnegotiable

Three in four millennials (75%) say they are more concerned about paying bills now than about saving for their financial future, along with 73% of Generation X and 56% of boomers. As a result, 66% of millennials say they have either stopped or reduced their retirement savings due to rising inflation, compared with 55% of Gen X and 47% of boomers.

The majority of Americans (62%) said they worry a major recession is right around the corner, and 77% say they think the market will continue to be very volatile in 2023.

More Americans are bracing for the long haul and thinking market volatility will affect their future finances. If markets continue to be volatile in 2023, 65% say they will have to adjust their retirement and investment plans. This was up from 57% at this time last year. At the same time, 40% of those with a 401(k) match worry that their employer will suspend the practice.

This could affect investing behavior. Just 19% say they are comfortable with current market conditions and ready to invest now. This is down from 29% at this time last year. Nearly two in three Americans (64%) say they would rather have their money sit in cash than endure market swings.

“It’s understandable that people are worried about market risks as we start the new year, and while it might feel a little counterintuitive, it’s important to remember that money left out of the market—even in times of volatility—isn’t working hard for you,” said LaVigne. “This money, while subject to potential market drops, will also miss out on gains when the market recovers. Timing the market is always a bad idea. Missing the days when the market performs best during recovery could postpone retirement for years.”


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Jacob Keiter is a husband, a writer, a journalist, a musician, and a business owner. His journey to becoming a writer was one that was paved with challenges, but ultimately led him to find his true calling. Jacob's early years were marked by a strong desire for creative expression. He was always drawn to music, and in his youth, he played in several bands, chasing the elusive promise of fame and success. However, despite his best efforts, Jacob struggled to find the recognition he craved. It wasn't until he hit a low point in his life that Jacob discovered his love for writing. He turned to writing as a form of therapy during a particularly difficult time, and found that it not only helped him to cope with his struggles, but also allowed him to express himself in a way that he had never been able to before. Jacob's writing skills quickly caught the attention of others, and he soon found himself working as a journalist for The Sun out of Hummelstown. From there, he went on to contribute to a variety of publications, including the American Bee Journal and Referee Magazine. Jacob's writing style is reflective of traditional journalism, but he also infuses his work with a unique voice that sets him apart from others in his field. Despite his success as a writer, Jacob also owns another business, JJ Auto & Home, which specializes in cleaning. Jacob's commitment to excellence is evident in all of his endeavors, whether it be in his writing or in his business ventures. Today, Jacob is the author of two books and continues to inspire others through his writing. His journey to becoming a writer serves as a reminder that sometimes our darkest moments can lead us to our greatest achievements.

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