Almost Half of Americans Believe Retirement Security Requires a Miracle, Survey Finds

According to a new survey from Natixis Investment Managers, 47% of Americans say achieving retirement security will take a miracle. This is an increase from about 40% of respondents who said the same two years ago.

The survey results come as research from the firm shows that the U.S. has improved its overall score for retirement security compared to last year, with 71% versus 69% in 2022. Most of the 44 countries included in the ranking also received higher overall scores compared to last year.

U.S. Falls in Retirement Security Ranking

Despite the improvement in overall retirement security score, the U.S. fell two places to No. 20 in the ranking of developed countries. The top five countries for retirement security include Norway at No.1, followed by Switzerland, Iceland, Ireland, and Luxembourg.

The overall U.S. retirement score improved due to factors such as a 50-year low in unemployment, interest rates that may provide better income for retirees, reduced tax pressures, and post-pandemic wage growth. However, the country also fell in the ranking compared to other countries due to high inflation, government debt, and a lower life expectancy following the Covid-19 pandemic.

Inflation as a Concern for Retirement

Natixis’ survey found that inflation is the biggest concern for Americans when it comes to retirement. 84% of survey respondents say recent economic activity shows inflation is a big threat to their retirement security, including 87% of retirees.

While 52% of working Americans expect to have the financial freedom to do what they want in retirement, 48% said they expect to face tough trade-offs. The most common sacrifice cited was living frugally (42%). Other trade-offs people expect to make include working in retirement or moving somewhere less expensive (31%), relying on family or friends to make ends meet (28%), or having to sell their home (26%).

These survey results come as the consumer price index posted its biggest monthly gain in 2023 so far, while posting a 3.7% increase in August from a year ago.

Impact of Inflation on Retirement Confidence

Other recent surveys have shown that inflation has shaken Americans’ retirement confidence. Americans now believe they will need $1.27 million to retire, a target that has increased with inflation. Moreover, 58% of retirement savers and retirees say their biggest worry is outliving their money.

High inflation has posed challenges for current retirees, even as they saw a record 8.7% boost for inflation to their Social Security benefits this year.

For pre-retirees, it’s important to remember that inflation will subside, according to Dave Goodsell of Natixis. When planning for retirement, individuals need to ask themselves whether potential inflation shocks mean they should save more toward their later years, delay claiming Social Security retirement benefits, annuitize their money, or work longer.

“A lot of times we don’t as individuals really step back critically and say what do I need to retire? What’s it going to be like?” Goodsell said.