Americans are facing a “new retirement reality” brought on by economic challenges such as inflation, market volatility, financial crises and fears of bank failures, according to a recently released study by Allianz Life Insurance Co. of North America.
Sixty-one percent of Americans surveyed said they are afraid they might outlive their savings, although many are not doing anything to make adjustments to plan for a successful financial future and retirement, according to Allianz.
“The key takeaway here is that the new retirement reality requires everyone, now more than ever, to have a plan and stick to it. The good news is, even in these uncertain times, proper planning will go a long way toward securing your retirement goals.” Allianz Vice President of Consumer Insights Kelly LaVigne said in a statement.
According to the study, recent financial crises have caused 46% of respondents to say that they have reduced or stopped saving for retirement and don’t expect to increase their savings levels in the foreseeable future.
“Troublingly, nearly 40% of Americans admit their retirement strategy is derailed, and they aren’t sure when or how they’ll get it back on track, and 56% consider ‘financial crises’ as a permanent part of their retirement planning,” according to Allianz.
The Minneapolis-based insurance company found that 40% of those asked said that they don’t even have a financial plan for retirement and “will just figure it out when they get there.” Fifty-six percent polled said they don’t know where to start planning beyond having a basic retirement account such as a 401(k) or individual retirement account. Only 42% said they have a written financial plan.
The new retirement reality is experienced differently among age groups. Baby boomers — those born between 1946 and 1964 — were more likely to say that they are better off financially heading into retirement than were previous generations. Seventy percent of baby boomers responding said they believe they have a better financial situation overall compared with their parents at their age. That compares with 55% of Gen Xer participants, those born between 1965 and 1980, and 61% of millennial respondents, those born between 1981 and 1996.
“Understandably, Gen Xers and millennials are feeling uncertain about the future. And looking back over the past 10-plus years, who can blame them,” LaVigne said. “From financial crises to politics to the pandemic, we all have reason to wonder what else might be just around the corner. That’s why it’s so important to have a written financial plan that includes not only sound strategies to accumulate the money you’ll need in retirement, but that also includes risk mitigation strategies to protect you from the inevitable rough patches.”
There might be some light on the horizon. According to Fidelity Investments’ Retirement Savings Assessment, released last month, Americans are beginning to refocus on the future amid decline in financial readiness for retirement. As the McKnight’s Business Daily previously reported, personal savings have increased by almost 5% over the previous year.
