Wed, 20 April 2022 | inflation retirement
As the rising cost of goods and services impacts the wallets of many Americans today, the growing concern of being able to save enough for retirement is also on the rise. Voya Financial, Inc. (NYSE: VOYA), released new findings from a consumer research survey 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. What’s more, an even greater amount 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%).
Retirement concerns greater among Generation X and millennials
Adding to the concerns of being able to meet current spending needs, Voya’s survey also found a majority (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 will be able to remain a priority. But what Voya’s survey revealed as most interesting is the generational view on retirement stemming from the impacts of inflation today. Voya’s findings noted that three-quarters (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 now make up roughly one-third of the U.S. labor force,1 agree or strongly agree that, because of inflation, they will need to delay their planned retirement date. Meanwhile, just 55% of baby boomers and 62% of those in Generation Z 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. “The past two years have also made it increasingly clear that many Americans will be faced with these competing priorities more than ever before. 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 a result, it’s important to remind individuals where many can seek support for addressing these challenges — their employer.”
Millennial mindset shifts from saving for experiences to emergencies
The concerns of millennials today may be rooted in their experience living through the Great Recession and then the recent economic downturn tied to the pandemic. Add to these concerns the burdens of student loan debt, higher health care costs or the rising cost of child care and education, and the uncertainties deepen. Often coined a generation likely to spend their hard-earned money on travel or entertainment, millennials stood out in Voya’s research as having the most concerns about the long-term financial impact of both COVID-19 and inflation. Voya’s 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 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%),” added Lavallee. “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. 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.”
“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. Resources such as health savings accounts to offset the burden of medical costs, student loan debt support and tools for building emergency savings continue to grow in popularity as employer wellness benefits. 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,” concluded Lavallee.
Source: Voya