As the rising cost of goods and services strains the wallets of many Americans, the growing concern of being able to save enough for retirement apparently is also on the rise.
Findings from Voya Financial’s consumer research survey reveal that two-thirds (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 larger percentage (71%) of individuals are worried about the impact of inflation on their personal finances and the ability to maintain their current lifestyle.
Adding to the concerns of being able to meet current spending needs, Voya’s survey also found that a strong majority (84%) of Americans believe their money does not go as far as it used to, leaving many to wonder how saving for the future will remain a priority.
Generational Differences
Interestingly, Voya’s survey also revealed that these retirement concerns are greater among Generation X and Millennials. According to the findings, nearly three-quarters of Millennials (73%) 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.
In addition, nearly 6 in 10 (57%) Millennials—who now make up roughly a third of the U.S. labor force based on data by Pew Research—agree that they will need to delay their planned retirement date because of inflation. In comparison, just 55% of Baby Boomers and 62% of those in Generation Z are worried about the impact of inflation.
“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,” says Heather Lavallee, CEO of Wealth Solutions for Voya Financial. “The past two years have also made it increasingly clear that many Americans will be faced with these competing priorities more than ever before.”
According to Lavallee, this could include challenges to building emergency savings, how to manage higher health care costs or general concerns about what actions to take and not to take when it comes to overall plans for one’s financial future. As such, she suggests that it’s important to remind individuals that many can seek support for addressing these challenges through their employer.
Millennial Mindset
Voya further observes that the concerns of Millennials may be rooted in their experience living through the Great Recession, as well as the recent economic downturn tied to the pandemic. Add to these concerns the burdens of student loan debt, higher health care costs, and the rising cost of child-care and education, and the uncertainties deepen, the firm notes.
Often coined a generation likely to spend their hard-earned money on travel or entertainment, Voya notes that Millennials stood out in its research as having the most concerns about the long-term financial impact of both COVID-19 and inflation.
The survey also revealed that 68% of Millennials agreed or strongly agreed that, because of inflation, they are not able to pay down debt as quickly as they would like. In addition, 77% agree that inflation has made them more aware of the need to save for emergencies or unexpected events.
Moreover, nearly half (43%) of individuals say that, because of inflation, they had to tap into finances they had previously set aside for retirement—a finding that is even higher among Millennials (57%).
“As a result, employers and employees are increasingly looking at the value of benefits in relation to the total net outcome of individuals’ health and wealth needs,” observes Lavallee. “And it’s becoming increasingly important for employers to recognize one’s entire savings picture when it comes to the benefits we provide our employees.”
As such, resources such as health savings accounts, student loan debt support and tools for building emergency savings continue to grow in popularity as employer wellness benefits, she further notes.
The survey was conducted March 29-30, 2022, on the Ipsos eNation omnibus online platform among 1,000 U.S. adults.
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