One-Quarter of Americans are Delaying Retirement Due to Inflation — What Other Lifestyle Changes are Taking Place?
For many Americans, skyrocketing inflation involves more than just griping about high prices — it means making fundamental lifestyle changes. A textbook example is this: About one-quarter of Americans have delayed retirement due to high inflation, according to a new report from BMO Harris Bank.
The BMO Real Financial Progress Index, based on a Spring 2022 survey of more than 3,400 U.S. adults, found that nearly 60% of respondents said inflation has adversely affected their personal finances. About one in four said it has had a major financial impact. A similar percentage said they will need to delay their retirement due to spiraling inflation.
The survey, conducted by Ipsos on behalf of BMO, took place before the latest inflation numbers were reported on June 10. According to that report, inflation in May grew 8.6% from the previous year, hitting its highest level since 1981.
Four out of five respondents to the BMO survey said they will make major changes to offset the impact of surging prices for everything from milk and eggs to gasoline and airfares. Here are some of the highlights:
- 42% are changing how they shop for groceries, including opting for cheaper items, avoiding brand names and buying only essentials.
- 46% are either dining out less or spending less when they do dine out.
- 31% are driving less to offset high gas prices.
- 23% are spending less on vacations or canceling them altogether.
- 22% are taking measures such as canceling subscriptions to the gym, cable, etc.
“Consumers must think differently about their finances in this inflationary environment,” Paul Dilda, head of consumer strategy at BMO Harris Bank, said in a press release.
He suggests seeking advice from financial expert on ways to successfully manage personal finances, such as learning which types of accounts offer the best savings rates. It’s also a good idea to delay big-ticket purchases and restructure your budget to eliminate non-essentials.
“By learning about what do to differently and what not to change during a period of inflation, consumers can maintain momentum toward their financial goals,” Dilda added.
This is especially important for older Americans who are either already retired or on the verge of retirement. About 10% of Gen Xers or baby boomers nearing retirement age have either already delayed retirement or are considering doing so, Fortune reported, citing a March survey from Nationwide Insurance.
As the BMO survey shows, an even greater number of Americans are now delaying retirement.
Only 22% of Americans believe they have enough saved for a comfortable retirement, according to a survey from asset management firm Schroders. That’s down from 26% last year. More than half of respondents in that survey said they expected to have less than $500,000 in savings by the time they retired — less than half the amount they believe is needed for an ideal retirement fund.
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