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Despite the pandemic, most Americans still feel optimistic about a comfortable retirement, but inflation is the top concern among those who aren’t as prepared.
That’s according to the Employee Benefit Research Institute and Greenwald Research 32nd annual Retirement Confidence Survey polling 2,677 workers and retirees in January.
“Even with the concerns of the pandemic and rising prices, overall, American workers and retirees still feel positive about their retirements,” said Craig Copeland, director of wealth benefits research at EBRI.
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The 2022 findings remain steady compared to 2021, with more than 7 in 10 workers reporting they are at least “somewhat confident” about retirement savings, including nearly one-third who feel “very confident.”
Some 8 in 10 retirees believe they’ll have enough money to live comfortably through their golden years, according to the survey. But the pandemic dimmed optimism for one-third of workers and one-quarter of retirees.
“The Americans who are more likely to feel that their futures appear grim since the pandemic are those who were already pessimistic about their futures, due to lower incomes, problems with debt or lower health status,” said Copeland.
Unsurprisingly, inflation and rising expenses are the top concern among workers and retirees feeling less confident about retirement.
When asked an open question about the specific reason for waning retirement confidence, one-half cited inflation and the rising cost of living, said Lisa Greenwald, CEO of Greenwald Research.
Annual inflation has crept higher since the survey in January, rising to 8.5% in March, according to the U.S. Department of Labor, affecting the price of everyday expenses like groceries, gasoline and housing.
However, spending changes in retirement may lessen the sting of some rising costs, J.P. Morgan’s 2022 Guide to Retirement found. Excluding health care, retirees may spend less on other costs, such as food and fuel.
While the Retirement Confidence Survey showed most retirees’ spending was as planned, 1 in 3 said they shelled out more than expected, up from one-fourth in 2021, the survey revealed.
“This could reflect increased use and desire for travel and leisure as the pandemic lulls,” said Greenwald. “It can also reflect inflation and the increased cost of travel and entertainment for some.
“While it is hard to know which reason is driving the higher expenses, a strong majority of retirees still feel their retirement lifestyle and spending are on track,” she added.
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