Inflation Woes Persist for Would-Be Savers

Inflation is hitting Americans hard this year, according to three separate research reports released by major financial firms recently.

Allianz Life, Equitable and MassMutual all report Americans are financially stressed and worried about having enough for living and retirement, and recent data shows no signs of that changing despite the U.S. Federal Reserve keeping interest rates relatively high.

The March Consumer Price Index report released Wednesday for All Urban Consumers noted a 0.4% rise in inflation, meaning over the past year it increased by 3.5%, an uptick from 3.2% in February—more than many forecasters estimated.

According to the recent research reports, the continued high cost of goods looks likely to only increase strain on an already stressed consumer base.

Your Money or Your Life

According to the 2024 Annual Retirement Study by Allianz released April 9, nearly two out of three Americans expressed more concern about running out of money than about death. This worry stems from fears of inflation, Social Security inadequacy, and high taxes.

Concerns about inflation topped the list, followed by worries about Social Security not offering sufficient financial support (24%) and high tax rates (22%). Gen Xers are particularly worried that insufficient retirement savings could lead to financial insecurity.

Respondents identified strategies to alleviate their worry about running out of money. Among their top three choices were: boosting retirement savings (41%), cutting current expenses and increasing savings (38%) and allocating a portion of retirement funds into a product offering lifelong income payments (35%). Other options included extending working years and delaying retirement (35%) and investing a portion of retirement savings in a product offering a balance of market protection and growth (26%).

Equitable, on April 10, revealed survey results showing that inflation remains a significant financial challenge for many individuals, although it has decreased notably since reaching a four-decade peak in June 2022. According to Equitable’s survey of over 1,000 consumers, three-quarters (75%) feel that their money doesn’t stretch as far as it did a year ago.

In the survey, nearly twice as many respondents cited inflation (39%) as the primary obstacle to achieving their financial goals compared to other factors such as high expenses (17%), insufficient income (10%), and rising debt payments due to high interest rates (8%).

Broken Nest Egg

Additionally, the survey found that respondents, on average, only set aside $175 per month for retirement savings, with more than a quarter (26%) admitting they haven’t started saving for retirement at all. In contrast, the survey highlighted that respondents typically spend a total of $400 per month on discretionary expenses, including $75 each on in-home streaming and entertainment, out-of-home entertainment, and out-of-home dining and food delivery services, with the remaining $175 allocated to travel.

MassMutual noted that despite financial strain on American families, many maintain a positive outlook on the future. According to its Consumer Spending & Saving Index released on April 9, Americans generally exhibit greater confidence in their financial prospects compared to the previous quarter. The data shows a significant decline in the number of Americans anticipating a recession compared to a year ago, with 37% expressing such concerns in Q1 2024, down from 52% in Q1 2023.

“It is heartening to observe how resilient the American people and economy are coming out of a year of uncertainty, persistent inflation, high interest rates, and evolving geopolitical tensions,” Paul LaPiana, head of MassMutual brand, product and affiliated distribution, said in a statement. “Practicing solid money habits daily, including consistently saving, reducing debt, and building a diverse investment portfolio, are meaningful building blocks towards a financially secure future.”