The four-decade high inflation is hitting Americans in every aspect of their life, from ballooning food and gas prices to an extremely pricey housing market. And now, a report finds that only half of Americans have the recommended savings.
The Anytime Estimate Retirement Finances Survey found that across all age groups, financial stress from the pandemic caused many Americans to stop saving for retirement entirely or spend retirement funds that would have accrued interest for years to come. In turn, this translates into the median amount Americans have saved for retirement being just $71,500, with 27% having less than $50,000 in retirement savings, and 16% having nothing saved.
And now, with red hot inflation, fewer people are saving for retirement, with only 63% of non-retired individuals currently saving for retirement — down from 93% before the pandemic, according to the survey.
There is one encouraging sign in the findings, however, as the survey found that although fewer adults are saving for retirement, those who are investing are setting aside more. Indeed, in 2022, 68% of Americans are following experts’ advice to save 15% or more of their annual income for retirement, compared to 61% prior to March 2020, the survey notes.
Another key finding of the survey is that 37% of Americans are not saving for retirement, with 39% of those reporting having $0 in retirement accounts. The survey adds that, surprisingly, boomers are the second-largest group not saving for retirement, with 38%, behind Gen Z, with 44%.
Finally, the survey found that one in 10 Americans don’t think they’ll ever be able to retire, with younger generations being more optimistic that they will.
Indeed, Gen Z is the most optimistic about early retirement and is 206% more likely than boomers to believe they could retire before 60, the survey found.
“Gen Z’s confidence should be taken with a grain of salt, though. The age group wildly overestimates its early- and mid-career salaries, potentially leading to unrealistic retirement goals,” the survey adds.
And in terms of gender, women are 71% more likely than men to say they won’t be able to retire, which the survey attributes to the fact that although some studies suggest women are more likely to participate in retirement plans, longer lifespans, the gender pay gap, and career breaks to care for children adversely impact women’s retirement savings.
The findings are in line with those of the BMO Real Financial Progress Index, released May 31, which found that as a result of inflation and rising consumer costs, 36% of Americans have reduced their savings and 21% have reduced their retirement savings, the survey notes.
However, this contrasts with Treasury Secretary Janet Yellen’s recent remarks. Speaking on ABC’s “This Week,” Yellen said that while “unacceptably high” prices are likely to stick with consumers through 2022, strong personal finances will stave off a recession, according to Fortune.
“We’ve had high inflation so far this year, and that locks in higher inflation for the rest of the year,” Yellen said, according to Fortune, adding that however, thanks to the savings Americans accumulated during the pandemic and an “extremely strong” labor market, a recession is not “at all inevitable.”
More From GOBankingRates
This article originally appeared on GOBankingRates.com: Half of Americans Don’t Have Enough Retirement Savings, New Study Shows