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Anxiety about Inflation Results in
Workplace Resources and Access to 401(k) Plans Remain Crucial to Keeping Retirement on Track
The latest New York Life Wealth Watch survey revealed that while inflation is impacting short-term financial decisions, Americans report that their retirement strategies remain largely intact. In fact, 65% of adults report that as a result of inflation, they are cutting back on short-term spending to stay on track with their long-term financial goals. One-in-four respondents report that their long-term financial strategy has not been impacted due to inflation and 72% of respondents still expect to retire at their desired age.
“Inflation risk is one of the ‘big four’ risks in retirement – alongside withdrawal rate risk, longevity risk, and the risk that the timing of investment returns negatively impacts how long a portfolio lasts – but it is the least talked about because we’ve been in a protracted low-interest rate environment,” said
Americans are making changes to their spending habits to maintain or increase contributions to their retirement savings. Respondents say they are cutting back on social activities like eating out (35%), nightlife (31%) and travel (28%), though some report holding off on larger expenditures like home renovations (16%) or having more children (13%).
Although Americans report being committed to maintaining their retirement savings contributions, they have also adjusted their short-term financial goals to accommodate the impacts of inflation. In fact, one-in-three adults report contributing less to their emergency funds in order to pay for everyday expenses, with the average monthly contribution falling by
“Creating a financial strategy is not something that should be done once and never thought of again until retirement. Ever-changing market environments can sometimes mean making difficult choices, as evident by the data showing Americans are contributing less to their emergency funds,” continued Huang. “That’s why it’s critical to seek the help of a trusted financial professional to ensure that your financial strategy can withstand a variety of market conditions and enables you to achieve your short- and long-term financial goals.”
Workplace Plans Help Keep Retirement on Track
Despite the immediate impacts of inflation on Americans’ wallets, retirement planning remains top of mind. When asked what prompted them to begin preparing for retirement, both retirees and non-retirees report access to resources through their workplace and feeling they were at the right age to begin preparing as top factors. About two-in-five retirees said that they started preparing because their job provided resources (40%) or they felt they were at the right age (38%), while almost half (45%) of non-retirees said they started preparing because their job provided resources, and 37% said they began preparing because they felt they were at the right age. When looking at ways retirees and non-retirees save, over half (52%) of respondents said their employers offer a 401(k) plan and match a certain percentage of contributions, with 44% reporting they contribute to reach the employer match. More than two-in-five respondents are also choosing a traditional IRA – with 42% of respondents reporting this as a savings vehicle.
“For many Americans, the workplace is their first exposure to retirement savings education. While it’s heartening to see a significant percentage making 401(k) contributions and taking advantage of an employer match if it is offered, this is just the first step toward building a financial strategy that can sustain living 30 years or more in retirement. The partnership of a trusted financial professional can help put these resources into the context of a broader financial strategy,” said Huang.
Additional findings from New York Life’s Wealth Watch survey include:
When it comes to retirement, starting early is key
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Retirees said they started preparing for retirement (on average) at age 42, and that they started prioritizing retirement at age 45.
- 42% of retirees said they started prioritizing retirement because they felt they were at the right age, followed by about one-in-three (32%) who said they started because their job provided resources.
- While 37% of retirees said they are happy with the age they started preparing for retirement, about half (46%) said they wished they had started earlier, at an average age of 30.
- Similarly, 38% of retirees said they are happy with the age they started prioritizing retirement, while 43% said they wished they had started earlier, at an average age of 33.
For a more in-depth look at the New York Life Wealth Watch survey findings, click here to access the supplemental datasheet.
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1 Based on revenue as reported by “Fortune 500 ranked within Industries, Insurance: Life, Health (Mutual),”
2 Individual independent rating agency commentary as of 9/30/2021:
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