A new study shows both groups are stressed over inflation and a looming recession.

2 minute read

How can you save enough to stop working when the value of a dollar is at a 40-year-low? Many Americans don’t believe they can right now.

That’s according to a recent survey from nonprofit organization Alliance for Lifetime Income. Both financial professionals and their clients worry that record-high inflation and an expected downturn in the economy will sideswipe their retirement savings.

Here are the top results of the survey of more than 2,000 pre-retirees and 514 financial advisers helping clients plan for retirement:

  • Rising inflation: 92% financial professionals vs. 81% consumers
  • Market trends reducing retirement income: 87% financial professionals vs 68% consumers
  • Recession: 84% financial professionals vs. 79% consumers

“Against the backdrop of record inflation, a bear market and global economic uncertainty, the misalignment in what financial professionals are relying on to create retirement income, and what clients are looking for, is a problem,” said Jean Statler, CEO of the Alliance for Lifetime Income. “Ninety-two percent of financial professionals are worried about inflation reducing client spending power, and so it’s good that many of them have changed their retirement planning approach this past year.”

Tracking the downward trends

In April 2021, Fed Chairman Jerome Powell and other high-profile economists claimed that “sustained inflation was highly unlikely.” Debt.com’s chairman Howard Dvorkin, CPA, publicly disagreed. Prices have since risen and the value of a dollar has diminished at record-high rates.

Fast forward nearly a year later, Debt.com reported Americans are spending about 15 percent more than they were before the pandemic. Further reporting shows the average weekly earnings from December 2021 to April 2022 dropped from $881 to $873.

At the time, the BLS reported wages had increased by 4 percent. But inflation increased by 7 percent, canceling out the rise in income. What can pre-retirees do to combat the costs?

Find out: Debt.com’s Complete Guide on How to Save for Retirement

Fight inflation

Dvorkin says most inflation advice you’ll come across is related to investments. What’s interesting is only one-third of Americans own “investments in stocks, bonds or mutual funds other than those held in an IRA or 401(k),” according to Pew Research.

Dvorkin believes in common sense money advice for common people in this country. He suggests building out a budget to focus on financial goals.

Debt.com’s annual budgeting survey shows year-over-year 8 in 10 Americans have a budget. Those who don’t should track their monthly spending ASAP. Then focus on eliminating high-interest credit card debt.

The U.S. has a consumer-driven economy but that doesn’t mean you need to spend what you don’t have. The cost to borrow will only increase as the Fed continues to raise interest rates.

There is always help when the times get tough. Credit counseling is an option to get ahead during a potential economic downturn.

“You can bet businesses are consulting CPAs like me and other experts when it comes to setting their prices in these inflationary times,” Dvorkin says. “You should consult an expert to fight back. For you, that’s a certified credit counselor at a nonprofit credit counseling agency. These pros will give you a free debt analysis and lay out all your options for getting out of debt and staying there.”

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About the Author

Joe Pye

Joe Pye

Joe Pye started writing about debt and personal finance five years ago while attending Florida Atlantic University, where he served as Editor-in-Chief of the student-run newspaper, the University Press. Before graduating with a bachelor's degree in multimedia journalism, Pye placed as a finalist for the Mark of Excellence award by the Society of Professional Journalists Region 3 for feature writing and in-depth reporting. In 2021, Pye earned First Place in the Green Eyeshade awards for "Best Blog" for his side-project BrowardBeer.com. Since taking a full-time position as associate editor at Debt.com in 2018, Pye has become a certified debt management professional who's applied what he's learned to his personal life by paying down more than $22,000 worth of combined credit card, student loan, auto and tax debt in less than two years.

Published by Debt.com, LLC