Americans’ Retirement Expectations Keep Dropping Over Economic Worries

The likeness of Benjamin Franklin is seen on $100 bills, in Marple Township, Pa., on July 14, 2022. (Matt Slocum/AP Photo)

The outlook of Americans towards their retirement plans has worsened over the past year according to a recent Gallup poll, with concerns about rising prices and recession sapping away optimism.

The expectations of non-retired Americans for a comfortable retirement are now at their “most pessimistic” level since 2012, falling by 10 percentage points since 2021, said a May 25 survey report. Only 43 percent of respondents now expect to comfortably live during retirement, down from 48 percent in 2022 and 57 percent in 2019 prior to the COVID-19 pandemic. In 2002 when the poll began, 59 percent of non-retirees expected to live comfortably post-retirement.

“Between 2002 and 2005 and again from 2017 through 2021, majorities of nonretirees expected a comfortable retirement,” Gallup said.

“But in the years during and after the Great Recession (from 2008 to 2013) and in the past two years amid high inflation and recession fears, less than 50 percent of nonretirees have been optimistic about their retirement.”

The Gallup poll comes as more Americans have become financially distressed over the past year. According to data (pdf) from the Federal Reserve, the percentage of American adults reporting that they were worse off financially in 2022 rose to 35 percent—the highest level since 2014.

“Overall financial well-being declined markedly over the prior year. Seventy-three percent of adults were doing at least okay financially in 2022, down 5 percentage points from 2021.”

Progress toward retirement savings goals declined last year, the central bank found. In 2022, only 31 percent of non-retirees said that their retirement plan was on track, which is down by nine percent from 40 percent in 2021.

Demographic and Retirement Expectations

In the Gallup poll, non-retired women were found to be more worried than men when it came to concerns about having enough money to live comfortably after retiring. While 50 percent of male participants expect a comfortable life, only 36 percent of the female participants expect the same.

In terms of age, 54 percent of individuals between 18 and 29 years foresee a comfortable retired life compared to just 38 percent among 30 to 49-year-olds and 39 percent among 50 to 64-year-olds.

While 65 percent of upper-income individuals see a comfortable life after retiring, this figure drops to 36 percent among middle-income individuals and then to just 19 percent among those in the lower-income group.

The dip in retirement expectations is happening amid concerns about the health of the U.S. economy. A Gallup survey conducted in April found that 75 percent of Americans believe the condition of the economy is worsening, up from 72 percent in March.

A probability model from the New York Federal Reserve pegs the chances of the United States slipping into a recession over the next 12 months at 68.2 percent, which is the highest level since 1982.

Stress From Inflation and Debt

According to the 2023 Retirement Confidence Survey report (pdf) published by Greenwald Research and the Employee Benefit Research Institute, concerns about inflation and debt levels have spiked among workers.

The survey found that 84 percent of workers were worried the rising cost of living will make it harder to save money. Four in ten expressed not being confident that their money will keep up with inflation during retirement, which is a “significant increase” from the one-third of workers who felt this way in 2022.

“Workers’ debt problems appear to be worsening. Significantly up this year, over 6 in 10 workers report their debt is a problem,” the survey report said. Almost half of the workers admitted that debt was impacting their ability to save for a comfortable retirement.

“Workers worry that their salaries won’t keep up with inflation and report more debt, while retirees worry about cost of living and expenses,” said Lisa Greenwald, CEO of Greenwald Research, according to an April 27 press release.

“Half of retirees report that their overall spending is higher than expected, an increase over last year’s one-third, and the share of retirees who feel their retirement lifestyle is worse than they expected is slowly growing.”