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Despite the pandemic, most Americans are still optimistic about a comfortable retirement, but inflation is the number one concern among those not as prepared.
That’s 32nd Annual Retirement Confidence Survey among 2,677 employees and retirees in January, according to the Employee Benefit Research Institute and Greenwald Research.
“Even with concerns about the pandemic and rising prices, U.S. workers and retirees are still generally positive about retirement,” said Craig Copeland, director of wealth benefits research at EBRI.
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The findings for 2022 remain stable compared to 2021, with more than 7 in 10 employees saying they are at least “somewhat confident” about retirement savings, including nearly a third who are “very confident”.
According to the survey, 8 in 10 retirees think they will have enough money to live comfortably through their golden years. But the pandemic diminished optimism for a third of workers and a quarter of retirees.
“The Americans who are more likely to feel their future looks bleak since the pandemic are the ones who were already pessimistic about their future, because of lower incomes, debt problems or lower health status,” Copeland said.
Unsurprisingly, inflation and rising costs are the number one concern among workers and retirees who are less confident in their retirement.
When asked an open-ended question about the specific reason for declining retirement confidence, half cited inflation and the rising cost of living, said Lisa Greenwald, CEO of Greenwald Research.
Annual inflation has risen since the January survey to 8.5% in March, according to the US Department of Labor, impacting the price of everyday expenses such as groceries, gasoline and housing.
However, changes in retirement spending could lessen the sting of some rising costs, JP Morgan’s 2022 Guide to Retirement found. With the exception of health care, retirees can spend less on other costs, such as food and fuel.
While the pensions confidence survey found that most retirees’ spending was on schedule, 1 in 3 said they had spent more than expected, by a quarter by 2021, the survey found.
“This could reflect increased use and desire for travel and leisure as the pandemic settles,” Greenwald said. “It may also reflect inflation and the increased cost of travel and entertainment for some.
“While it is difficult to know what is driving the increased spending, a large majority of retirees still feel that their retirement lifestyle and spending are on track,” she added.