Inflation has managed to affect all of our lives in one way or another. Now, it has also begun to affect people’s retirement plans. A majority of Americans have reported that they have not been able to keep up with their retirement savings, even though around three in five Americans are contributing the same or even more than they were last year.
A Bankrate survey has revealed that 55% of Americans believe their retirement savings are not where they would like them to be. Around 35% say they’re “significantly behind,” and another 20% report that they’re “somewhat behind.”
“More than one-third of workers feel they are ‘significantly behind’ on their retirement savings,” says Greg McBride, CFA, Bankrate’s chief financial analyst. “And those who already feel behind are twice as likely to be contributing less this year than workers who feel they’re on track or ahead of where they should be.”
The most surprising result of this survey is that the number of Americans contributing more to their retirement accounts actually outpaces those who are adding less.
“Workers who are not contributing more to their retirement accounts this year overwhelmingly point to inflation as the reason why, and by more than a 2-to-1 margin over any other single response,” says McBride.
Playing Catch Up
Bankrate surveyed 2,312 Americans about the state of their retirement savings.
Around 55% of Americans say they are behind on retirement savings. 54% say that inflation is the biggest reason they’re not saving more.
71% of boomers say that they’re behind on savings. 46% of higher earners report that they aren’t contributing enough.
The survey also found that highly educated Americans are more likely to be increasing retirement savings.
Break It Down
55% Of Americans Report Being Behind on Retirement Savings
Around 35% said they are significantly behind where they need to be. Almost 20% say their savings are somewhat behind.
20% said they are “right on track,” and another 8% say they are “slightly ahead” of where they should be.
More than 7% reported that their savings are “significantly ahead” of where they needed to be, and 10% said they don’t know where they stand.
Despite these figures, most Americans report that they are contributing the same or more to their retirement accounts than they did last year.
More than 34% stated that they were adding “about the same” to their retirement accounts. 7% said they were adding “slightly less”, and 9% said they were adding “much less.”
Another 24% of Americans did not contribute anything last year and aren’t contributing anything this year.
According to the survey, the most likely groups to not contribute last year or this year are Gen Z, people who had not attended college, or people who earn less than $50,000 per year.
In the group of Americans who are on track or ahead, 42% are contributing more this year, and just 10% are contributing less.
Of the Americans who are behind on retirement savings, 18% are contributing more, and 21% are contributing less.
Inflation Is the Biggest Reason They’re Not Saving More
Of the Americans not contributing the same amount to their savings, inflation was the most cited reason for not doing so.
Respondents were also allowed to give one or more responses. Other responses included:
- 24% cited stagnant or reduced income
- 24% cited new expenses
- 23% cited debt repayment
- 22% cited a desire to keep more cash on hand
- 18% cited market volatility
- 7% cited a lack of need or desire to increase contributions
- 7% don’t know
- 5% cited “something else”
Inflation was the most-cited reason for every generation, but the second most popular reason varied.
Gen Z (18-25) and millennials (26-41) cited “new expenses”, 36% to 31%. Gen X and baby boomers were at 15% and 21%.
Keeping cash on hand was more popular with the younger generations too. 35% in the Gen Z category said they keep cash on hand, 24% of millennials said the same, along with 19% of Gen X and 17% of baby boomers.
Baby Boomers Are More Likely Behind on Savings
The survey suggests that age is strongly correlated with whether Americans believe they are behind on retirement savings or not. Gen Z was the only group that reported not being significantly behind.
Gen Z: 31% are ahead, 30% are behind
Millennials: 19% are ahead, 46% are behind
Gen X: 9% are ahead, 65% are behind
Baby Boomers: Only 7% are ahead, and 71% are behind.
Younger workers were also more likely to increase their contributions to their retirement savings.
Gen Z: 30% have increased their contribution, and 10% decreased
Millennials: 30% increased their contribution, and 18% decreased
Gen X: 19% increased their contribution, 17% decreased
Baby Boomers: 22% increased their contribution, 18% decreased
Higher Earners Aren’t Even Contributing Enough
It would be easy to assume that higher earners are more likely to remain on track for retirement, but even they are having a hard time.
For those who earn more than $100,000, 46% report that they’re behind on retirement savings, compared to 23% who are ahead.
For those earning $80,000 to $99,999, 54% said they are behind, compared to 17% who are ahead. For those whose annual income is less than $80,000, 59% said they are behind, compared to 13% who are ahead.
Highly Educated Americans Are More Likely To Increase Their Contributions
According to the survey, Americans who completed higher education are more likely to raise their retirement contributions compared to less educated Americans.
Those with a post-graduate degree are 36% more likely to have increased their contribution, while 14% lowered them.
Those with a four-year degree are 33% more likely to have increased their contributions, while 13% decreased them.
Those with “some college” were pretty evenly split, with 21% having increased their contributions and 21% decreasing them.
Of those with a high school diploma, 20% are increasing their contributions from last year, while 15% are contributing less.