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Almost half of Americans, 47%, say achieving retirement security will take a miracle, according to a new survey from Natixis Investment Managers.
That is up “quite a bit” from about 40% of respondents who said the same two years ago, according to Dave Goodsell, executive director of the Natixis Center for Investor Insight.
The results come as research from the firm shows the U.S. has improved its overall score for retirement security compared to last year, with 71% versus 69% in 2022.
Most of the 44 countries included in the firm’s ranking also received higher overall scores compared to last year.
Yet, the U.S. fell two places to No. 20 in the ranking of developed countries.
The five top countries for retirement security include Norway at No.1, followed by Switzerland, Iceland, Ireland and Luxembourg.
The overall U.S. retirement score improved due to multiple factors, according to Goodsell, such as a 50-year low in unemployment; interest rates that may provide better income for retirees; reduced tax pressures; and post-pandemic wage growth, particularly for those with low incomes.
At the same time, the country also fell in the ranking compared to other countries due to high inflation, government debt and a lower life expectancy following the Covid-19 pandemic.
Natixis’ survey found one factor, inflation, has contributed the most to Americans’ pessimistic outlook for retirement.
“Inflation is definitely sitting on people’s minds in a way it hasn’t in a long time,” Goodsell said. It’s the top concern for investors, but also their biggest financial fear. This includes 87% of retirees.
48% expect tough choices in retirement
There is some optimism, with 52% of working Americans expecting to have the financial freedom to do what they want in retirement. That includes 87% of retirees.
48% expect tough choices in retirement
There is some optimism, with 52% of working Americans expecting to have the financial freedom to do what they want in retirement.
Yet, at the same time, 48% said they expect to face tough trade-offs in retirement.
The most common sacrifice cited, with 42%, was living frugally. Other trade-offs people said they expect to make is working in retirement or moving somewhere less expensive, each with 31%; relying on family or friends to make ends meet, 28%; or having to sell their home, 26%.
The survey results come as the consumer price index posted its biggest monthly gain in 2023 so far, while posting a 3.7% increase in August from a year ago.
Other recent surveys have shown inflation has shaken Americans’ retirement confidence.
Americans now believe they will need $1.27 million to retire, a target that has increased with inflation, according to Northwestern Mutual.
Moreover, 58% of retirement savers and retirees say their biggest worry is outliving their money, Cerulli Associates recently found.
High inflation has posed challenges for current retirees, even as they saw a record 8.7% boost for inflation to their Social Security benefits this year, according to Mary Johnson, Social Security and Medicare policy analyst at The Senior Citizens League.[cost-of-living adjustment]”The vast majority still are seeing a gap between what their COLA
has covered and the actual price increases,” Johnson said.
Ask yourself, ‘What do I need to retire? ‘
For pre-retirees, it’s important to remember that inflation will subside, said Goodsell of Natixis.
“Realize this is a point in time with inflation,” he added. It’s important to be aware. “It’s good to be aware of it. When planning for retirement you should ask yourself if inflation could cause you to delay Social Security retirement benefits or annuitize your savings. “A lot of times, we as individuals don’t really step back and ask ourselves what I need to retire?” What’s going to happen? “