A growing number of older Americans are delaying or abandoning their retirement plans as they continue to battle chronic inflation, according to a new survey published by Nationwide.
More than six in 10 investors said their expectations for retirement have changed "significantly" in the last five years, while about 50% said their dreams for retirement have been delayed, altered or canceled as a result of the economic conditions seen in the last five years.
Consumers are grappling with a number of financial headwinds, including steep interest rates and ongoing inflation that has made the cost of just about everything from rent to gasoline to groceries more expensive.
INFLATION IS UP 20% SINCE BIDEN TOOK OFFICE
While inflation has fallen considerably from a peak of 9.1% notched during June 2022, it remains well above the Federal Reserve's 2% goal. And when compared with January 2021, before the inflation crisis began, prices are up a stunning 20%.
As a result, just 38% of investors believe in having a retirement savings target, or a specific goal for retirement. About 42% of respondents said the "magic number" needed to retire comfortably is between $1 million and $2 million, while about 18% pegged the figure at more than $2 million.
"Americans believe they will need over $1 million to retire comfortably – a figure that could be discouraging for even the most committed retirement savers," said Rona Guymon, senior vice president of Nationwide annuity distribution.
INFLATION INCREASES 3.4% IN APRIL AS PRICES REMAIN ELEVATED
The uncertain economic landscape has many Americans reconsidering whether retirement is a realistic goal. More than one-quarter of all non-retired investors said they would likely be forced to return to the workforce at some point due to inadequate savings if they were to retire within the next 12 months, while 19% doubt that they will ever save up enough money to retire.
An additional 19% said they will retire later than planned because of inflation.
High inflation has created severe financial pressures for most U.S. households, which are forced to pay more for everyday necessities like food and rent. Grocery prices are up more than 21% from the start of 2021, while shelter costs are up 18.37%, according to FOX Business calculations. Energy prices, meanwhile, are up 38.4.%.
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Price hikes are particularly devastating for lower-income Americans because they tend to spend more of their already-stretched paycheck on necessities and therefore have less flexibility to save money.
The typical U.S. household needed to pay $227 more a month in March to purchase the same goods and services it did one year ago because of still-high inflation. Americans are paying on average $784 more each month compared with the same time two years ago and $1,069 more compared with three years ago.
