Majority of Americans are more concerned about paying bills than planning their financial future

MINNEAPOLIS – Jan. 23, 2023 – The majority of Americans say present financial issues are more important than preparing for their future. Two in three Americans (67%) say they are more concerned about paying bills right now than saving for their financial future, according to the 2022 Q4 Quarterly Market Perceptions Study from Allianz Life.

Inflation risks reducing purchasing power is driving those present concerns. The vast majority (82%) of Americans say they are worried about rising inflation continuing to have a negative impact on the purchasing power of their income in the next six months.

 

Many are turning to their retirement accounts to help account for these short-term needs. The majority of Americans (55%) say they have either stopped or reduced their retirement savings due to rising inflation. And 45% say they have had to dip into their retirement savings because of rising inflation.

“Reducing retirement savings should be a last resort, short-term answer for inflation because it could have a significant detrimental effect on financial security for years to come,” said Kelly LaVigne, vice president of consumer insights, Allianz Life. “This is why it is so important to work with a financial professional to achieve long-term financial stability with a written plan that incorporates strategies for risks like inflation.”

Millennials are the most likely to say they are forgoing long-term saving. Three in four millennials (75%) say they are more concerned about paying bills now than about saving for their financial future, compared to 73% of Gen Xers and 56% of boomers. At the same time, 66% of millennials say they have either stopped or reduced their retirement savings due to rising inflation, compared to 55% of Gen Xers and 47% of boomers.

 

Market volatility is worrying Americans

Worry about a recession risk and market volatility persist. The majority of Americans (62%) continue to say they worry a major recession is right around the corner. The vast majority of Americans (77%) say they think the market will continue to be very volatile in 2023.

And more Americans are buckling down for the long haul in thinking market volatility will affect their future finances. If markets continue to be volatile in 2023, 65% say they will have to adjust their retirement and investment plans. This is up from 57% at this time last year. At the same time, 40% of those with a 401(k) match worry that their employer will suspend the practice.

This could affect investing behavior. Just 19% say they are comfortable with current market conditions and ready to invest now. This is down from 26% last quarter and 29% at this time last year. Nearly two in three Americans (64%) say they would rather have their money sit in cash than endure market swings.

“It’s understandable that people are worried about market risks as we start the new year, and while it might feel a little counterintuitive, it’s important to remember that money left out of the market – even in times of volatility – isn’t working hard for you,” said LaVigne. “This money, while subject to potential market drops, will also miss out on gains when the market recovers. Timing the market is always a bad idea. Missing the days when the market performs best during recovery could postpone retirement for years.”