Americans’ finances are being squeezed as inflation pushes
up prices on things such as rent, groceries and gasoline.
As a result, one-quarter of Americans will have to delay
their retirement, according to the BMO Real Financial Progress Index, a
quarterly survey conducted between March 30 and April 25.
Putting off retirement plans is mostly due to disrupted
savings from increased prices, the survey found. Thirty-six percent of survey
respondents have reduced their savings and 21% are putting away less for
retirement in order to keep up with growing costs, according to the survey.
“We haven’t seen this level of inflation in a very long
time, and it’s very daunting,” said Paul Dilda, head of consumer strategy at
BMO Harris Bank. He added that many people in or near retirement may not have
considered this surge in prices in their financial plans, which has thrown off
budgets and timelines as well.
Time horizons
Younger Americans have been the most adversely affected.
More than 60% of those ages 18 to 34 said they had to pull back savings
contributions to make up for rising costs of necessities.
In addition to grappling with higher prices on nearly all
goods and services, Americans are facing a volatile stock market that may have
also contributed to shifting retirement timelines.
So far this year, the S&P 500 has shed more than 12%, a
stark contrast from the previous year’s gains.
“It’s difficult to save, and these times are making it even
more difficult,” said Dilda.
Seeking financial advice
The good news is that people are actively making changes to
their budgets to combat rising prices.
This includes changing how they shop for groceries, what
subscriptions they pay for each month and even how they vacation for the time
being, the survey found.
Americans are also planning more than they were before
inflation spiked, according to the report. This quarter, more Americans are
setting yearly budgets, writing down a financial plan to follow and meeting
with their financial advisors monthly.
“We’re seeing a lot of people taking those actions so that
they can continue to enjoy the life they want and at the same time be able to
save or manage their budget accordingly,” said Dilda.
There’s also been an uptick in people looking to
professional investment advice. In the latest survey, 55% said their bankers
were crucial to helping them meet their financial goals, an increase of 5
percentage points from the previous quarter, and 52% said the same of their
financial advisors, a jump of 6 percentage points.
Click here for the
original article.