Squirreling away money for a rainy day,, is not exactly America's forte, and a survey shows that soaring inflation is making it even harder for people to put money away for retirement.
More than half, or 54%, of adults said they had stopped saving for retirement or reduced their contributions because of inflation, according to an online poll of 1,004 adults taken in September by insurance provider Allianz Life. More than a quarter also reported having to dip into their retirement savings to keep pace with everyday expenses.
To be sure, many Americans have struggled to set money aside long before the ongoing bout of inflation. Research published in 2019 found that nearly half of U.S. families had exactly nothing saved for retirement.
Mind the gap
Research shows the average balance in U.S. retirement accounts is less than $87,000. In stark contrast to that meager amount, Americans expect to needto be comfortable in retirement, according to Northwestern Mutual.
"People are feeling a financial crunch at the moment. It's a harder environment to save in, and many have seen losses in their investment and 401k portfolios," Tim Harrison, Northwestern Mutual financial adviser, told CBS MoneyWatch this week.
Inflation and other factors "are escalating what people estimate they'll need to retire comfortably. So we're seeing people push out the age at which they expect to retire, and more saying they're not sure they'll be ready when the time comes," he added.
Only a quarter of current retirees are generating enough income to replace $7 out of every $10 in pre-retirement income — the usual rule of thumb for a comfortable retirement, according to a study released earlier this month by Goldman Sachs.
About half of retirees are living on less than half their pre-retirement income, with those older Americans "particularly vulnerable" to inflation and other economic trends, Goldman said.
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