After years of elevated inflation that continues to chip away at the value of a dollar, a majority of retired Americans are worried they do not have sufficient savings to sustain themselves through the entirety of their golden years.
A new survey of 2,000 U.S. retirees released by Schroders found 68% are concerned about outliving their assets, and less than half (44%) believe they have saved enough.
The report stated that the rising prices are “taking a toll” on Americans who are in retirement, finding that 89% of respondents are concerned over inflation lessening the value of their assets.
Eighty-five percent said they are concerned about higher-than-expected health care costs, and 76% said they are concerned about a major market downturn that would significantly reduce their assets.
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One out of three retirees told Schroders they are concerned that financial stress will affect their overall health, and 26% said they have lost sleep while worrying about their financial situation.
“Whether it’s a trip to the gas station, grocery store or pharmacy, prices in the U.S. have increased noticeably in recent years, and that is particularly challenging for retirees living on fixed income sources,” said Deb Boyden, head of U.S. defined contribution at Schroders. “The challenges facing retirees today are further evidence of the retirement savings crisis.”
According to the report, nearly half (47%) of all retirees said their expenses in retirement are higher than they expected, and 49% believed Medicare would cover more of their health care expenses.
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The inflation rate ballooned from 1.4% in January 2021 to 9.1% in June 2022. While it has since declined to 3.5% as of March 2024, it remains above the Federal Reserve’s target rate of 2%.
From January 2021 to March 2024, overall inflation (seasonally adjusted) increased 18.9%. During the same period, all food costs rose 21% while shelter costs were up 20.5% and energy costs went up 36.9%.
The increased costs on everyday goods are wreaking havoc on Americans’ budgets, leaving low-income households most vulnerable – especially those on fixed incomes, including many retirees.
But Americans of all age groups are feeling the squeeze, and that has experts concerned about both current and future retirees.
“In addition to eroding the spending power of retirees, inflation is making it harder for younger generations to save for the future,” Boyden told FOX Business. “This is particularly concerning as the safety net of corporate pension plans won’t be available for many in Gen X, Y and Z.”
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