Persistent inflation will force a quarter of Americans to cut back on retirement savings, which could derail long-term financial goals for years to come, according to new data.
The Center for Global Financial Literacy Excellence (GFLEC) at the George Washington University School of Business and the Teachers Insurance and Annuities Association of America (TIAA) Institute.
“Inflation makes everything very expensive, so people have to navigate that new environment and cut back on some objectives,” said Andrea Hassler, assistant professor of financial literacy at GFLEC. Stated.
Breaking down by race, Hispanic-American retirement savings plans were hit the hardest. The researchers found that he was twice as likely to stop saving while facing rising prices for things like gas. Hassler said it’s also because most Hispanic workers use their cars to commute.
didn’t save a single cent
“If you’re dealing with a household scenario of very high inflationary pressures, and you have to drive 40 miles to work each day, you may be really cramped by rising gas prices. We will consider whether we need to change,” TIAA senior economist Paul Jakowski told CBS Moneywatch.
However, interruptions to personal savings plans can have serious financial consequences in the future. As it stands, Americans are already far behind in saving money for retirement: about 27% of people over the age of 59Not at all, according to a recent study by financial services firm Credit Karma.
Even temporarily suspending regular contributions to retirement savings accounts can be detrimental, especially for younger workers who can expect the money they save today to grow the most over time.
“This has long-term implications. You’re sacrificing your retirement savings for the next 20, 30 years,” Jacobowski said.
Saving less, of course, means that after decades of stagnant wages, rising income concentration, frequent financial crises and, most recently, the highest inflation in four decades, the broader economy has become more difficult for many Americans. reflect the difficulties For example, his 30% of those surveyed struggled to make ends meet in 2022, down from his 24% in 2021.
Another stark number that underscores the challenges many face in accumulating savings, not to mention having enough money to live comfortably in retirement: 39% of those surveyed I didn’t have enough money to cover my living expenses. That’s based on her January online survey of 3,503 US adults, according to the GFLEC-TIAA study.
These challenges are magnified among certain ethnic and generational groups. About 40% of Black, Hispanic, and Generation Z Americans (people born between 1997 and 2012) say they find it difficult to make ends meet, according to a GFLEC-TIAA survey. increase.