How Inflation Is Causing Americans to Rethink Major Life Events

Amid surging consumer prices, a new survey finds that virtually all consumers are concerned about inflation and are adjusting their behavior because of it, including some who may alter their retirement plans. 

According to the survey by the Nationwide Retirement Institute, 90% of respondents are concerned about the rising rate of inflation and 58% say their purchasing power is declining.

As a result, consumers are delaying major life events because of rising costs, especially younger generations. More than a third (35%) of Gen Z and Millennials (34%) have already postponed or are considering postponing plans to start a family. Additionally, 33% of Gen Z and another 28% of Millennials have already postponed or are considering postponing plans to have a wedding. 

This trend extends to older generations as well. More than 1 in 10 (13%) consumers near retirement age (Gen Xers and Baby Boomers) have already postponed or are considering postponing plans to retire. In addition to cancelling or postponing major life events, consumers across generations are making changes in their daily lifestyles, including:

• eating out less (48%);
• driving less (35%);
• relying more on credit cards (21%);
• looking for a better paying job (19%)—this was higher for Gen Z (32%) and Millennials (30%);
• moving in with family to save money (14%)—this also was higher for Gen Z (30%) and Millennials (21%); and
• reducing contributions to their 401(k) (10%).

Most consumers also expect continued price increases and economic upheaval through the rest of 2022. Just 28% of respondents expect the current inflationary surge to be temporary and the majority expect increases in housing costs, gas prices, interest rates and the general cost of goods and services over the next 12 months. In addition, 55% expect income tax rates to rise and 46% say the same of unemployment.

Federal Reserve Action

And with such a grim outlook on the U.S. economy, nearly two-thirds (64%) feel the Federal Reserve should be taking a more aggressive approach to addressing inflation, Nationwide found.   

Older consumers are most likely to support stronger actions from the Federal Reserve (Baby Boomers 72%), but even 50% of Gen Zers agree the central bank should do more.

If the Federal Reserve increases interest rates as expected at its March 2022 meeting, the news will be met with mixed feelings. Nationwide found that consumers are most likely to feel worried (37%) or frustrated (30%) by news of a rate hike, with just 23% feeling hopeful. Moreover, 14% of all respondents say they would be confused, which rises to 25% among Gen Z.

“While it’s understandable that consumers are relying more on credit cards and reducing their retirement plan contributions to soften the short-term effects of inflation, it’s important for consumers to consider the implications on their long-term financial strategy,” says Eric Henderson, president of Nationwide Financial’s annuity business. “This is an opportunity for consumers to work with a financial advisor to revise their spending budget so they can make day-to-day ends meet while still save for future goals, like retirement.”

The findings are based on an online survey conducted by Edelman Data and Intelligence (DxI) on behalf of Nationwide from Feb. 11–17, 2022, among 2,000 nationally representative adult U.S. consumers.