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(Bloomberg) — Americans are having a harder time saving for retirement because of rising living costs, according to three reports released this week.
A survey published by NFP reported that 46% of working adults said they were "deprioritizing or unable" to save for retirement because housing, car payments, healthcare and other everyday expenses are taking priority over long-term retirement planning.
The financial strain has forced many to delay saving for retirement or stop saving altogether. About 72% of the 1,000 respondents said they're off track in their retirement savings goals, according to NFP, which is part of Aon Plc, an insurance and reinsurance broker.
A separate survey published by Schroders Plc found that 27% of 1,500 respondents reduced their contributions to workplace retirement plans or borrowed from their accounts to cover loans and make other emergency payments. One-third of US workers with an employer-sponsored retirement plan reported having more credit-card debt than retirement savings.
"Rising costs are forcing tough tradeoffs, and saving for retirement is often the first thing that gets deprioritized," said Deb Boyden, the head of US defined contribution at Schroders.
The result is that a comfortable retirement by 65 is becoming out of reach for many Americans. That prospect seems particularly bleak with the Social Security trust fund projected to be depleted by 2032, which, absent government action, would mean significant cuts to promised benefits.
In another survey by Thrivent, almost two-thirds of non-retirees said they're focused on their current personal finances rather than looking ahead to retirement planning. About 35% of respondents also said they feel they're falling behind their peers in retirement planning, largely because of high living costs.
The pressure of having to save more than $1 million for retirement and being behind amid an affordability crisis can create a sense of overwhelm, said Stephen Jans, NFP's national practice leader for wealth management. It's important to not be paralyzed by the need to save a "magic number" and instead create manageable goals, he said.
"Identify those most important things and put them in the top of the budget and focus on that," Jans said. "As people build out their vision and their goals, just make miniature goals that are attainable and achievable so they can get small victories along the way."
To contact the author of this story:Michelle Amponsah in New York at mamponsah4@bloomberg.net
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