Is inflation destroying the American retirement dream? Four in 10 investors say higher prices have destroyed plans for their twilight years
Four in 10 investors say inflation is destroying their retirement dreams, according to a groundbreaking new survey.
The Natixis Global Pension Index found that rising prices were considered the biggest threat to investors – both retired and working – behind fears of recession, war and high interest rates.
Experts say the world is in the midst of a so-called “silver tsunami”: a rapidly aging population that is putting more pressure on several economies.
Rising gasoline prices pushed annual inflation in the US to 3.7 percent in August, new figures show.
It was the second month in a row that prices have risen, although the figure is still well below last June’s peak of 9.1 percent.
The Natixis Global Retirement Index shows that rising prices are the biggest threat to both retired and working investors, behind fears of recession, war and high interest rates.
The crisis has opened investors’ eyes to the threat of inflation, after years of relatively stable costs.
Natixis spoke to 750 working Americans for the study. All respondents had at least $100,000 in investable assets.
Still, 47 percent worried they wouldn’t have enough money to enjoy retirement, while 31 percent feared they would never save enough to retire.
Inflation is often a bigger threat to people who are out of work because they have fixed incomes and don’t have the ability to move to better-paying jobs or negotiate salary increases.
Dave Goodsell, executive director of the Natixis Center of Investor Insight, told Bloomberg: “The big spike in inflation is going to hit people hard, and they have a lot of lingering financial trauma.
“For people on fixed incomes, those spikes in food and energy forced them to make some tough choices.”
US inflation accelerated for the second month in a row to 3.7 percent annualized – up from 3.2 percent in August
Analysts say the spike is due to select items like gas and shelter – which are notoriously volatile – while the majority of prices remained stable
Overall, America ranked 13th among Natixis’ top 25 countries for financial security in retirement. It marked a drop of two places for the US, which ranked at number 11 in 2022.
Switzerland came in first, followed by South Korea, Australia and Singapore.
This comes after US Bureau of Labor Statistics figures released today show annual inflation is now hovering at 3.7 percent – well above the Fed’s target of 2 percent.
Rampant inflation has led to an aggressive campaign of rate hikes by the Fed, pushing interest rates from near zero to a 22-year high.
Despite the latest inflation spike, the Central Bank is expected to keep interest rates stable while deciding whether a further rate hike will be necessary later this year to combat inflation.
Core inflation, which excludes volatile prices including food and energy and is considered a better gauge of long-term trends, remained broadly mild.