Inflation fears eating away at nearly 90 percent of retirees, says Schroders

Inflation is continuing to take a financial and mental toll on retirees, with nearly 70 percent concerned about outliving their savings, according to the Schroders 2024 US Retirement Survey.

The survey drew responses from 2,000 US investors aged 28 to 79, including 498 retirees, revealing that less than half of Americans in retirement believe they have saved enough.

Only 44 percent of retirees said they felt confident they had enough savings, while 32 percent were sure they hadn’t saved adequately, and 24 percent were unsure. The study further found that a staggering 89 percent were at least somewhat worried about inflation eroding their assets.

“Whether it’s a trip to the gas station, grocery store or pharmacy, prices in the US have increased noticeably in recent years, and that is particularly challenging for retirees living on fixed income sources,” Deb Boyden, head of US defined contribution at Schroders said in a statement.

“The challenges facing retirees today are further evidence of the retirement savings crisis,” she said

The survey also highlighted major financial concerns over healthcare costs and market downturns. More than three-quarters of retirees (76 percent) were worried about a significant market decline reducing their assets, while 85 percent feared escalating healthcare expenses. Nearly half (49 percent) believed Medicare would cover more of their healthcare costs than it currently does.

Based on the survey responses, healthcare-related expenses eat up an average of 14 percent of retired Americans’ monthly income. A modest 58 majority percent of retirees admitted to having no clear idea how long their savings would last, and 63 percent wished they had planned better before retiring.

When asked about their overall financial situation in retirement, only 4 percent of retirees described themselves as “living the dream.” On the other side of the spectrum, an equal number of respondents said they were “living the nightmare.”

Looking at the in-betweens, 44 percent said they were “comfortable,” one-third (34 percent) declared their situation was “not great but not bad,” and 15 percent were “struggling.”

Nearly-four fifths of retirees said they used pension plans for income, making them the most relied-on pillar out of all retirement accounts in the survey.

Thirty-eight percent said they were using a pension plan, while 34 percent relied on a spouse’s pension. In contrast, only 22 percent drew income from a 401k, 403b, or 457 plan, and 24 percent relied on their spouse’s similar plans.

“The corporate pension plans that are being relied upon by today’s retirees may not be there for all retirees in future generations,” Boyden warned.

“This shift in how Americans will be meeting their expenses in retirement moving forward underscores the urgency for bolder actions from retirement savers, plan sponsors, and asset managers.”