27 November 2022

Saving for Retirement a Top Priority Despite Falling Confidence

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Economic confidence among many Americans is dropping in the current inflationary environment, with perceived financial health down from the start of 2021 but a top priority in 2022, a new survey finds.

According to a new annual Wealth & Wellness Index published by Empower Retirement and Empower affiliate Personal Capital, only 34% of Americans surveyed say they are “very financially healthy,” a drop of 14% from March 2021. The survey also found that economic confidence among respondents remains relatively low at 40%, down 2% from a year ago and 12% from the start of the COVID-19 pandemic.

In many cases,, progress toward major financial milestones moved from “achieved” to “a work in progress.” When asked about their ability to save consistently, the level dropped from 45% of respondents in the first quarter of 2021 to 35% by the fourth quarter. Similarly, responses in relation to their “ability to retire when I want” dropped from 41% to 35% during 2021. 

Americans are also apparently lowering their expectations for how much they need to save. When asked about how much savings they need to be financially healthy, 53% of respondents in the fourth quarter of 2021 said they need less than $100,000, compared with 44% at the start of the year. Similarly, only 27% said they achieved their savings goal, down from 37% in the first quarter of 2021.

What’s causing many Americans to feel less confident in their finances and in the economy despite positive indications at a macroeconomic level? According to the findings, Americans are worried that their income won’t keep pace with their increasing costs in the current inflationary environment. In addition, debt is also of increasing concern, as nearly half (49%) of respondents do not feel that their debt is manageable and only 32% are debt-free (down 7% from last year).

“It’s a complicated picture to describe what’s happening to the economy,” says Craig Birk, Chief Investment Officer at Personal Capital. “The labor market is strong and retail growth is ticking upwards, but we’re also dealing with recent market volatility and record high inflation. It’s unsettling for many.”

Longer-term Optimism  

Despite this relatively recent decline in confidence, survey respondents report feeling optimistic about their longer-term financial futures. According to the survey, 68% are confident in their ability to plan for retirement, up from 63% in 2020, while 71% are confident in their ability to achieve saving goals they’ve set for themselves, up from 65% in 2020. 

Americans are also prioritizing their financial goals in 2022. When asked what their top New Year’s resolution was, paying off personal debt (37%) and saving for retirement (36%) now surpass traditionally common goals like exercising more (33%) and losing weight (28%), the study notes.

What’s more, respondents are reportedly seeking allies to help them build financial health. Most respondents surveyed indicated that they turn to those they know and trust for advice: friends and family, retirement providers and financial advisors. But the biggest jump among these groups, according to the findings, is that respondents are looking for more help from their employer’s retirement plan provider—rising to 23% at the end of 2021 from 15% at the start of the year.

Retirement planning is also the leading financial topic people want to learn about, according to the findings:

Retirement planning (31%)

Cryptocurrency (26%)

Security of financial accounts (25%)

Investing options, including managed accounts and TDFs (24%)

Financial advising (24%)

“The fact that paying off debt is a higher priority than exercising shows many people want to improve their financial health, and it’s clear that financial confidence is intrinsically linked to overall health and wellness,” says James Burton, Personal Capital’s Chief Marketing Officer. “Americans are seeking financial advice and we don’t see this boom in financial planning changing anytime soon.”

The findings are based on a survey conducted by The Harris Poll on behalf of Empower and Personal Capital from Oct. 29–Nov. 3, 2021, among 2,006 adult U.S. citizens. The study also references data from prior research, including a survey conducted from March 23–April 8, 2021, among 2,005 respondents.

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