Bloomberg News reports that more and more Americans are being found to fall behind on the savings for their retirement, and to add to the woes, inflation has made it harder for these Americans to keep pace with the same.
A survey was conducted by Bankrate, which found that 55% of the participants think they have retirement savings that are way behind where they should have been. This was up by 52% in comparison to last year. Amongst the ones keeping aside their savings the same or lower than what they saved in 2021, more than 50% revealed that due to the surging prices, they are not being able to save more.
The generation that is closest to retirement, known as the Boomers, are the ones that are the most likely to stay behind, at 71% in comparison to only 30% belonging to Gen Z.
Falling behind
According to Greg McBride, who is the chief financial analyst, associated with Bankrate, although Americans know they need to save more, and one significant hindrance is inflation. He also said that as per inflation barometers and CPI, the lion’s share of inflation is from the necessities such as energy costs, food, and shelter, which are not discretionary expenses. These expenses are straining savings the most.
Reduced income aside from inflation was cited as the other major factor for which these respondents could not save for retirement. Another aspect they have been emphasizing for not saving enough is keeping more cash in hand.
Many people have also said that in the last two years, many have not been able to save enough in the present or last year. On the other hand, 16% said they are saving less compared to other times.
Reasons for shortfall in savings
The following table highlights the factors holding respondents back from saving more.
Source: Bloomberg, Bankrate.com
On one hand, some people are keeping aside less money, while others are drawing down their retirement funds. Around 20% of the participants have revealed that they have withdrawn money from their retirement savings in the last two years, while 21% cited emergency expenditures and 11% have said that they have withdrawn money to meet expenses related to utilities and grocery, as per MagnifyMoney. However, unsurprisingly, 21% have revealed that most of them think they are unprepared for their retirement.
