Inflation causing Americans to cut back on savings: Here's how to stay on track

As Americans face record-high inflation and recession fears, many are cutting back on short- and long-term savings, according to a recent survey by Morgan Stanley at Work.

Inflation caused 62% of workers to reduce their contributions to savings, according to the Financial Benefits survey. Nearly one-third (31%) said they decreased contributions to their 401(k)s, while 26% said they have cut back on paying down debt. 

In addition, 24% of American workers are dialing back on the contributions to emergency savings, while 13% are cutting back on their contributions to college savings funds and 19% are reducing contributions to health savings accounts (HSA).

"Today’s economic environment, in many ways, may be more perilous than at the height of the pandemic," Morgan Stanley at Work said in its report. "Faced with new realities and challenges, employees are paying closer attention to their workplace benefits—a trend that will likely continue indefinitely."

If you’re struggling in today’s economy, consider paying down high-interest debt with a personal loan at a lower rate. Visit Credible to compare loans from different lenders, without affecting your credit score. 

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Employees seek financial wellness benefits from employers

In the midst of economic uncertainty, many workers want help from their employers, according to the survey. About 84% of employees believe employers should be more involved in guiding them through financial challenges.

In fact, financial wellness benefits are major motivators for workers when considering job roles. The report found that 93% of employees view retirement planning assistance as a priority when choosing jobs. And 87% of human resources leaders are concerned that employees would leave for other jobs if they didn’t offer financial benefits that met employees' needs.

Financial challenges still present major hurdles for workers, with 71% reporting that financial stress is negatively affecting their work and personal lives. That’s up 7% from the year prior, Morgan Stanley at Work says.

"Amid new challenges like persistently high inflation, many employees are seeking help managing their short- and long-term financial needs," Brian McDonald, head of Morgan Stanley at Work, said in a statement. "We have seen firsthand that many employers are stepping up to tackle these challenges, yet there remains more work to be done."

If you’re having difficulty in today’s economic conditions, consider refinancing your mortgage at a lower rate to reduce your monthly payments. You can visit Credible to compare mortgage rates from multiple lenders to find the rate that’s best for you.

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Americans seeking second jobs to fight inflation 

As prices rise for basic goods like food and energy, many Americans are taking on extra work.

More than half (57%) of workers said they have searched for new or additional roles over the past year because of the rising cost of living, according to a recent survey by the recruiting firm Bluecrew. The report also found that 65% of workers said they see themselves seeking new roles in the coming months in order to combat rising inflation. 

But for some, extra pay may not outpace rising prices. Inflation has given Americans the biggest pay cut in 25 years, according to data from the Federal Reserve Bank of Dallas. 

Just over 53% of workers saw wage growth this year that was less than the rate of inflation, according to the Dallas Fed. These workers experienced a median decline in inflation-adjusted wage growth of 8.6% in the second quarter of 2022 compared to the same time last year.

If you are struggling in today's economy, you can consider refinancing your private student loans at a lower rate, saving you money on your monthly payments. Visit Credible and speak with a student loan expert to see if this is the right option for you. 

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