Americans’ finances are under pressure as inflation pushes up the prices of items like rent, groceries and gasoline.
As a result, one in four Americans will have to delay retirement, according to the BMO Actual Financial Progress Index, a quarterly survey conducted from March 30 to April 25.
The survey showed that the delays in retirement plans were mainly due to the disruption of savings due to higher prices. According to the survey, 36% of respondents have reduced their savings and 21% have reduced their retirement savings to keep up with rising costs.
“We haven’t seen inflation at this level for a long time, and it’s pretty scary,” said Paul Dilda, head of consumer strategy at BMO Harris Bank, adding that many people who are retiring or about to retire may not have The price hike was factored into their financial plan, which also disrupted budgets and schedules.
Young Americans are hardest hit. More than 60% of 18- to 34-year-olds said they had to cut back on savings to offset the rising cost of everyday needs.
Not only are Americans grappling with higher prices for nearly all goods and services, but also stock market volatility that could lead to a shift in retirement age.
The S&P 500 is down more than 12% so far this year, in stark contrast to last year’s gains.
“It was hard to save, and it’s getting harder now,” Dilda said.
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The good news is that people are actively adjusting their budgets to deal with rising prices.
This includes how they buy groceries, how much they pay for monthly subscriptions, and even how they take time off, the survey found.
Americans are also planning more than they did before inflation surged, according to the report. This quarter, more Americans are making annual budgets, creating financial plans and meeting with their financial advisors monthly.
“We’re seeing many people take these actions so they can continue to enjoy the life they want while being able to save or manage their budget accordingly,” Dilda said.
Demand for professional investment advice has also increased. In the most recent survey, 55% said their bankers played an important role in meeting their financial goals, an increase of 5 points from the previous quarter, and 52% said their financial advisors did the same, an increase of 6 points percent.
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