Half of Americans Say They’re Reducing or Stopping Retirement Savings Due to Inflation

An Allianz survey finds another 43% of Americans are also dipping into savings to meet costs. But recent PLANSPONSOR and ICI surveying shows that, at least when it comes to workplace retirement plans, participants are less likely to be cutting back.



Managing rising inflation is causing 54% of Americans to reduce or stop socking away retirement savings, according to a new survey by Allianz Life.

The Minneapolis-based insurance division of Allianz heard from 1,004 respondents that 43% of them had to dip into retirement savings to meet rising costs. Meanwhile, 75% said they’re worried the cost of living will impact their overall retirement plans, according to the September poll.

Half of retirement savers pulling back is “a real big number,” says Kelly LaVigne, vice president of consumer insights at Allianz Life, who oversaw the survey. “That’s a serious concern, there’s no doubt about it. Unfortunately, it’s absolutely at the wrong time as well, because if we look at where the market is right now, you’d be buying things at a discount.”

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The survey adds to recent research from Pew showing that inflation is the top concern for many Americans as the country nears mid-term elections in which a Democrat-led Congress is battling to keep its majority in the House and Senate. While average wages have increased along with rising inflation, real average hourly earnings (adjusted for inflation) decreased month-over-month for the 18th month in a row through September, according to the latest data from the U.S. Bureau of Labor Statistics.

LaVigne noted that the survey was of a general pool of Americans, and that people in an employer-sponsored retirement plan may be less likely to be changing their contributions, as 401(k)s and similar plans tend to be “set it and forget it.”

He says it makes sense that Millennials were the most likely to say they stopped or reduced retirement savings (65%), as they face costs including homes, childcare, and starting college savings for kids. About 40% of Baby Boomers, by contrast, said they were cutting back on savings.

The Employer-Plan Difference

A separate survey released Thursday by PLANSPONSOR (a partner publication of PLANADVISER) found that about 18% of workers enrolled in employer-sponsored defined contribution (DC) plans have either decreased or stopped deferrals into the plan. That lower figure suggests workers enrolled through their employer – whether part or full-time – are more likely to stay at their set level of retirement saving, at least in their plans.

Accurate data about retirement plan contributions and withdrawals aren’t available yet for analysis, says Peter Brady, a senior economist for retirement and investor research at the Investment Company Institute (ICI), an association of investment funds based in Washington D.C. ICI does, however, survey retirement plan recordkeepers that combined have more than 40 million participants in employer DC retirement plans. That most recent survey broadly found that participants stayed the course amid inflation and the market decline.

“This is consistent with what we know of 401(k) savers,” Brady says. “They tend to be pretty steady.” 

The ICI survey showed that both contribution and withdrawal data stayed essentially the same in workplace retirement plans compared to the first half of 2021. Recordkeepers reported an average of 1.6% of participants stopping contributions, up from 1.1% in the same period in 2021. About 3.5% changed asset allocation of their contributions, down from 4.5% the year prior, and these changes may have been either increases or decreases in contribution.

Total U.S. retirement assets themselves did take a big dip due to overall market decline, falling 10.2% in Q2 as compared to the start of the year, according to ICI’s latest data. The drop in value for retirement savings, Brady says, is due to the markets, not retirement savers pulling back from their employer plans. 

“It’s the existing assets that is wagging the dog,” he says. 

Inflation Putting Retirement Security in Spotlight

“It’s understandable that Americans’ confidence in their retirement security is waning,” Kristi Martin Rodriguez, senior vice president of the Nationwide Retirement Institute, said in an email. “Their monthly expenses have outpaced their personal income growth.” 

According to a survey that the Columbus, Ohio-based insurer Nationwide released in August, almost one-fifth (17%) of U.S. parents have decreased their retirement plan contributions, withdrew funds, or took a loan from their retirement savings as a result of inflationary pressures. 

“While people are understandably looking for short-term relief to manage rising costs, it’s important for them to remember that touching their retirement savings should be a last resort,” Rodriguez said. “And if they do absolutely need to scale back or dip into their contributions, they should look to replenish them as soon as they get back on their feet. Employers can serve as critical educators for workers on these topics.

The discussion of retirement saving amid inflation comes as policymakers are seeking continued reforms to the national retirement system to add to 2019’s The Setting Every Community Up for Retirement Enhancement (SECURE) Act. On Thursday, U.S. Senators Rob Portman (R-Ohio) and Ben Cardin (D-Maryland) published an op-ed in The Hill calling for passage of legislation that would make moves including expanding a savers’ tax credit to lower-income earners to put away more for retirement, as well as boosting a tax credit to small businesses for offering a retirement plan to workers.

The IRS also took steps last week to increase the amount of retirement savings that can be tax-exempt, moving the annual contribution limit for workers in certain retirement plans from $20,500 to $22,500, as well as an increase in IRAs from $6,000 to $6,500.

According to the Allianz survey, Americans may not be in the mood to boost retirement savings anytime soon. In addition to inflation worries, 62% said they believe a recession is imminent. This is causing 71% of people to keep some money out of the markets to protect it from loss, the survey said.

The worries over retirement savings are also adding to the majority of Allianz’ survey respondents (78%), saying they are open to a guaranteed lifetime income option, such as an annuity, as part of their retirement strategy.

Young Workers Want Cryptocurrency in 401(k)s

These workers are more likely to consider a broad range of retirement plan investments and want more options. 



Young workers are investing beyond their 401(k) for retirement and want a wider range of investments in which to invest, new data shows.

The research suggests there is an opportunity for greater allocations from retirement plan participants to alternative assets outside of the traditional 401(k) options and that young workers are investing in cryptocurrency, the Charles Schwab 2022 401(k) Participant Study—Gen Z and Millennial Focus shows.

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The Schwab study shows 43% of Gen Z invests in cryptocurrency, compared to 47% of Millennials, 33% of Gen X and 4% of Baby Boomers. Across generations, 33% of workers use cryptocurrency outside of their retirement plans, but younger workers are more likely to own a broad range of investments including cryptocurrency, the study finds.

“Younger workers today are beginning their financial journey from a different place than older generations did when they began,” Catherine Golladay, head of Schwab workplace financial services, said in a statement. “They see an opportunity to reach their financial goals through diverse assets that are making them excited about investing and engaged in their financial futures.”

Young workers want a wider range of investment options and vehicles, the study finds. Across all generations surveyed, 39% said that they want to invest in annuities with guaranteed income after retirement. Among Gen Z, 41% want an in-plan, guaranteed income option in their retirement plan , versus 45% of Millennials, 39% of Gen X and 28% of Baby Boomers, the study finds.

Overall, 32% reported wanting to invest in cryptocurrency, if it were an option: 46% of Gen Z, 45% of Millennials, 31% of Gen X and 11% of Baby Boomers.

“The best news is that younger workers are open to leveraging all these resources to help them achieve financial security,” said Brian Bender, head of Schwab retirement plan services, in a press release.

Employment changes could be driving young employees to look again at how they are saving and investing for retirement, adds Golladay.

The study shows that 18% of all workers have changed employers in the last 12 months: 38% of Gen Z, 27% of Millennials, 13% of Gen X and 7% of Baby Boomers.

“[Younger workers] are questioning traditional approaches to both work and retirement as they have changed jobs and reconsidered priorities during the pandemic,” she adds. “The 401(k), while still their primary retirement savings tool, is no longer viewed as their only path to retirement.”

Whereas for 61% of Baby Boomers and Gen X, their first investing experience is in a 401(k), compared to 37% for Gen Z, 54% of Millennials and 54% of Gen X, Schwab’s research finds.    

Regarding investment vehicles, 26% of Gen Z members surveyed  and 30% of Millennials reported that they are more likely to invest, outside of their 401(k), in index exchange-traded funds, compared to 20% of Gen X and Baby Boomers, 15%. Across generations, 23% invest in ETFs, the study shows.

Additionally, 19% of Gen Z respondents reported being likely to invest in fractional shares, compared to 17% of Millennials, 9% of Gen X and 5% for Baby Boomers, the survey finds. The overall rate for investing in fractional shares is 12%, Schwab finds. Overall, 10% invest in commodities and among Millenials 16% invest, compared to 15% of Gen Z, the study shows.

“All workers want to feel heard, and it makes a powerful statement when an employer can demonstrate that their benefits reflect what employees want,” says Golladay. “The odds are that younger hires are already exploring their next job or will be soon. Employers seeking to retain talent must consider the saving and investing preferences of young workers as they evaluate their benefit programs.”

The online study was conducted by Logica Research for Schwab Retirement Plan Services, with 1,000 total retirement plan participants. Survey respondents were actively employed by companies with at least 25 employees, 401(k) plan participants and 21-70 years old. The survey was conducted between April 4 and April 19.

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