Despite Economic Woes, a Majority of Americans Are Optimistic About Retirement

May 4, 2022 Topic: U.S. Economy Blog Brand: Politics Tags: RetirementU.S. EconomySocial SecurityInflation

Despite Economic Woes, a Majority of Americans Are Optimistic About Retirement

More than seven in ten workers admitted that they are at least “somewhat confident” about their retirement savings.

A new survey indicates that despite the years-long pandemic and red-hot inflationary pressures, most Americans are still optimistic about being able to achieve a long and comfortable retirement.

“Even with the concerns of the pandemic and rising prices, overall, American workers and retirees still feel positive about their retirements,” Craig Copeland, director of wealth benefits research at the Employee Benefit Research Institute, said in a statement.

“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,” Copeland added. The thirty-second annual Retirement Confidence Survey, conducted by the Employee Benefit Research Institute and Greenwald Research, polled nearly 2,700 workers and retirees last January.

According to personal finance expert Kate Dore of CNBC, the survey results from this year remain steady compared to 2021—more than seven in ten workers admitted that they are at least “somewhat confident” about their retirement savings. Nearly one-third of respondents say they feel “very confident,” and roughly eight in ten believe that they will have enough money to live comfortably throughout their retirement years.

However, rising inflation and the cost of living were cited most often as a reason for feeling less confident about their retirement prospects. Compared to last year, the poll showed that a larger share of retirees report that their spending on housing, travel, and leisure was higher than expected.

“This could reflect increased use and desire for travel and leisure as the pandemic lulls. It can also reflect inflation and the increased cost of travel and entertainment for some,” Lisa Greenwald, CEO of Greenwald Research, said in a release.

“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,” Greenwald continued.

Still, as inflation levels have hit a four-decade high, many seniors are struggling to make ends meet even with a sizable 5.9 percent cost-of-living adjustment (COLA) that was approved for this year.

According to Mary Johnson, a Social Security and Medicare policy analyst at the Senior Citizens League, the latest COLA has already been cut by nearly $163 this year due to fast-rising prices. Furthermore, Social Security benefits have lost an eye-opening 32 percent of their buying power since 2000.

A recent Senior Citizens League survey also revealed that the cost of borrowing will get more expensive for about 43 percent of the older households that carry debt on credit cards.

“Credit card debt in retirement can quickly get out of hand, and this is especially true during periods when interest rates climb,” Johnson said in a release.

“We are in a steeply inflationary period when rising interest rates will mean many consumers will need to reduce the amount of debt that they are carrying on credit cards month to month in order to keep that cost manageable,” she continued.

Ethen Kim Lieser is a Washington state-based Finance and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.

Image: Reuters.