47% of Americans say achieving retirement security will take a miracle | ET REALITY

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Nearly half of Americans (47%) say achieving retirement security will take a miracle, according to a new survey from Natixis Investment Managers.

According to Dave Goodsell, executive director of the Natixis Center for Investor Insight, that figure is “quite a bit higher” than the roughly 40% of respondents who said the same two years ago.

The results come as research from the company shows that the United States has improved its overall retirement security score compared to last year, with 71% compared to 69% in 2022.

Most of the 44 countries included in the company’s ranking also achieved higher overall scores compared to last year.

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However, the United States fell two places to 20th place in the ranking of developed countries.

The top five countries for retirement security include Norway at number 1, followed by Switzerland, Iceland, Ireland and Luxembourg.

America’s overall retirement score improved due to multiple factors, according to Goodsell: a 50-year low in unemployment; interest rates that can provide better income to retirees; reduced fiscal pressures; and post-pandemic wage growth, especially for those with low incomes.

At the same time, the country also fell in the ranking compared to other countries due to high inflation, public debt and lower life expectancy following the Covid-19 pandemic.

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The Natixis survey found that one factor, inflation, has contributed most to Americans’ pessimistic retirement prospects.

“Inflation is definitely on people’s minds in a way it hasn’t been in a long time,” Goodsell said. “It’s their biggest investment concern, and also their biggest financial fear, this idea of ‚Äč‚Äčincreasing prices every day.”

Most respondents (84%) say recent economic activity shows that inflation is a major threat to their retirement security. That includes 87% of retirees.

48% expect difficult decisions in retirement

There is some optimism: 52% of American workers expect to have financial freedom to do whatever they want in retirement.

However, at the same time, 48% said they expect to face tough trade-offs in retirement.

The most common sacrifice cited, at 42%, was living frugally. Other trade-offs people said they hope to make are working in retirement or moving somewhere less expensive, each at 31%; depending on family or friends to make ends meet, 28%; or having to sell their home, 26%.

The survey results come as the consumer price index recorded its biggest monthly gain in 2023 so far, while it posted a 3.7% increase in August from a year earlier.

Other recent surveys have shown that inflation has shaken Americans’ confidence in retirement.

Americans now believe they will need $1.27 million to retire, a goal that has risen with inflation, according to Northwestern Mutual.

Additionally, 58% of savers and retirees say their biggest concern is outliving their money, Cerulli Associates recently found.

High inflation has posed challenges for today’s retirees, even as they saw a record 8.7% increase in inflation for their Social Security benefits this year, according to Mary Johnson, Social Security and Medicare policy analyst at The Senior Citizens. League.

“The vast majority still see a gap between what their COLA (cost of living adjustment) has covered and actual price increases,” Johnson said.

Ask yourself: ‘What do I need to retire?’

For early retirees, it’s important to remember that inflation will decline, said Goodsell of the Natixis Center for Investor Insight.

“You have to realize that this is a time of inflation,” he added. “It’s good to be aware of it; it won’t be like this forever.”

At the same time, it’s a reminder that prices can skyrocket when you live on a fixed income, Goodsell said.

When planning for retirement, you need to ask yourself whether potential inflationary shocks mean you should save more for your later years, delay claiming Social Security retirement benefits, annuitize your money or work longer, he said.

“A lot of times, as individuals, we don’t step back and say what do I need to retire?” Goodsell said. “As will be?”

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