A new Allianz Life survey reveals that due to escalating inflation and expensive borrowing rates, Americans are saving less for their retirement and sinking deeper into debt. The survey elucidates that for most Americans, immediate bill payments have taken precedence over saving for retirement due to soaring prices. A staggering 42% of the respondents admit to drawing from their retirement funds to meet everyday expenses.
Inflation, the survey suggests, has hindered 69% of individuals from contributing to their savings as they had previously. Millennials report experiencing an even harder blow to their savings abilities due to inflation than Gen Xers or Boomers. The challenging financial landscape shaped by inflation has further led over half of Americans to accumulate more debt by using credit cards for basic necessities. This comes as borrowing is costly due to high benchmark interest rates maintained by the Federal Reserve.
Allianz Life's VP of Consumer Insights, Kelly LaVigne, emphasizes that the escalating cost of living is straining American budgets. While inflation growth may have slowed down, prices remain high, prompting a word of advice: delay significant purchases, continue saving towards future needs, and avoid new debts whenever possible.
However, despite the economic challenges, 37% of Americans remain hopeful about the economy. This marks an increase from the previous quarter’s 31%, with participants expressing satisfaction towards the current inflation trajectory. Nevertheless, a significant 68% anticipate inflation worsening in the following year, the lowest since 2021.
LaVigne maintains that inflation is a perennial phenomenon and a constant increase in the cost of living is inevitable. The principal question being the rate and extent of the rise.