Some US workers delaying retirement due to inflation, rising cost of living: survey

Inflation and the rising cost of living are why 40% of U.S. workers ages 45 and older are delaying retirement, which is double the number of workers who said the same last year because of the COVID-19 pandemic, according to a survey.

The Nationwide Retirement Institute survey said that 24% of employees felt they were "on the wrong track for retirement." And the number of workers who reported having a positive outlook about their retirement plan and financial investments dropped to 58%, down from 74% last year.

Nationwide surveyed 1,000 retirement plan participants aged 45 or older and 100 employees between the ages of 35 and 44, as well as 500 company plan sponsors or benefits decision-makers and 100 government plan sponsors or benefits decision-makers.

Overall, 73% of respondents said they planned to delay retirement because of insufficient income, 47% said recent market volatility shrunk their savings, and 44% listed a future market crash as the reason for wanting to work four more years than initially planned.   

"We are experiencing the highest inflation that many Americans have ever experienced in their adult lives," Scott Inman, a financial adviser with GenWealth Financial Advisors, said. "If they planned to live on a flat income in retirement, this would no doubt rock their confidence and cause them to delay retirement. 

"We've also experienced one of the worst years ever for the ‘go-to’ 60/40 investment portfolio," he continued. "Seeing their account balances plummet if they planned on retiring off the high water mark of their assets would also cause them to delay retirement."

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Delay may factor into ‘quiet quitting’

Employer respondents in the Nationwide survey said that delaying retirement harmed the well-being of their employees. 

The survey said 30% of employers reported lower team morale, 29% reported adverse effects on employees' mental health, 27% noticed lower workforce productivity and 22% reported negative effects on the physical health of employees.

"Employers may find themselves with a workforce that lacks motivation to go above and beyond without the ability to reward employees for a job well done," Amelia Dunlap, vice president of Nationwide Retirement Solutions marketing, said in a statement. 

Dunlap added that delayed retirements may "unintentionally contribute to quiet quitting," a recent trend that refers to employees doing the bare minimum at work instead of going above and beyond for their employer.

And the trend of quiet quitting is not unlike the old practice of "retiring in place," Jay Zigmont, Ph.D., CFP and founder of Childfree Wealth, said. That practice is when employees do enough work to make it through until retirement – especially in their last years. 

"The label of quiet quitting or retiring in place does not matter as the results are the same," Zigmont said. "A down year in the market is a stress test for people's retirement and financial plans. Those with strong plans (and assets) will still be able to retire. Many others may find that their assumptions were wrong or that they need to make adjustments before they can retire." 

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Retirement ‘super savers’ saving more this year, study says

However, rising costs and market volatility have not kept some savers from increasing their retirement contributions, according to a Principal Financial Group study. 

The study said that 59% of so-called "super savers" plan to save more than $20,000 towards retirement in 2022, up from 51% in 2021.  

Even with markets down this year, nearly half (45%) of super savers have made no changes to their investments. Instead, most have made lifestyle changes like cutting down on entertainment and travel expenses and reviewing monthly budgets to counter inflation.

However, the study said that an increasing number of super savers plan to phase retirement, and 54% said they plan on earning an income outside their primary career, working less than 40 hours per week — a 13% increase from 2021.

"Both Generations Y and Z are the most eager to reach their sunset years," the study said. "On average, Generation Y respondents are planning to retire at age 58 and Generation Z by 57.5."

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