Confidence in retirement security dropping, inflation not helping: BlackRock study

A crisis of confidence may be brewing among workplace retirement savers, according to a new BlackRock study.

BlackRock Inc.'s survey of retirement savers shows confidence in retirement security declined for the first time since prior to the pandemic. The survey showed a notable drop in confidence among savers who participate in a workplace retirement plan, with 37% saying they lacked confidence in the latest survey, up from 32% in 2021.

In addition, the study showed more women than any other group (47%) reporting a lack of confidence. Among savers who didn't have access to a workplace retirement plan, only 51% feel they are on track for retirement, according to the survey.

“As we experience new market headwinds that could impact the retirement security of millions of Americans, it’s a critical time for our industry to ensure people are planning for retirement with confidence and clarity," Anne Ackerley, head of retirement at BlackRock, said in a statement. "While it’s encouraging to see double-digit savings rates across every generation, we have work to do to help more Americans reach retirement with dignity and on their own terms — particularly those without access to employer savings plans, and women and people of color.”

Generationally speaking, the study found Gen Z is demonstrating the strongest retirement savings discipline, setting aside an average of 14% of each paycheck, compared to 12% for other generations. Gen Z also showed the highest familiarity with retirement strategies such as target-date funds.

That said, across generations and multiple demographics, fewer Americans believe they are on track for retirement as a result of inflation and market volatility. The survey showed nearly all (87%) workplace savers are concerned about inflation affecting their retirement. These savers also report a decrease in spending on big-ticket items (54%) and consumables (42%) as a result. 

"This is valid concern as it has been decades since investors have faced inflation at this current accelerated pace," said Arthur Ambarik, CEO of Perigon Wealth Management. "Americans who start saving early will have the advantage of compounding interest to help offset inflation."

"Investors who are approaching retirement — within 10 to 15 years — should stay the course during market declines and review their asset allocations to ensure their portfolios are aligned with their risk tolerance and time horizon," Ambarik said.

"For years, individuals have planned for retirement with a general idea of how much it would cost — and now, as interest rates go up, real estate prices go down and inflation runs rampant, they don't know if they will have the money to live out their dream," said Thomas Goodson, president of AmeriFlex Group. "Identifying assets and creative ways to leverage them — for clients as well as advisers looking towards retirement — helps mitigate these inflationary pressures."

Finally, a majority of respondents (64%) are also worried about longevity risk, a concern that's even higher among Black/African American (75%), Asian/Pacific Islander (71%) and Hispanic/Latino respondents (67%).  Along those lines, a majority of plan sponsors (69%) reported they are worried about inflation wearing down their plan participants’ retirement savings, and nearly all employers and savers (90%) are interested in investment options that would provide guaranteed income in retirement.

BlackRock surveyed more than 300 sponsors of large defined-contribution plans, 1,300 retirement plan participants,1,300 individuals saving for retirement outside of a workplace plan, and 300 retirees.