Inflation is gutting retirement savings and most Americans don't see what's coming

More than four in 10 Americans have cut or stopped retirement contributions in the past year to cover daily expenses, even as a projected Social Security benefit cut of approximately 22% approaches by 2032 - and most have no idea it's coming, according to a new survey released by TIAA.

The research, Stretched Thin: Where Americans Stand on Affordability, Retirement, and Social Security, was conducted by KRC Research among 1,000 U.S. adults aged 18 to 65 between July 27 and July 31, 2026.

Its findings paint a compounding retirement crisis: everyday cost-of-living pressures are forcing Americans to deplete the savings they will increasingly need, while the federal program they rely on most faces a looming shortfall that barely registers in public awareness.

For financial advisors, the data arrives as a clear call to action and a roadmap for the conversations clients most need to have.

A Social Security blind spot

Only one in five Americans, approximately 20%, said they were very aware that Social Security's trust fund is projected to run short by 2032, according to the 2026 Social Security Trustees Report.

One in five respondents (21%) said they were hearing about the projected shortfall for the first time through the TIAA survey itself. According to the same report, if Congress fails to act, all beneficiaries would face an automatic, across-the-board benefit cut of roughly 22%.

The knowledge gap is striking given how heavily Americans depend on the program. The TIAA survey found that 80% of respondents viewed the rising cost of living and inflation as a direct threat to their retirement plans, yet the looming reduction in the program designed to anchor those plans remains largely invisible to the public.

"The most consequential threat to Americans' retirement income is also one of the least understood," said Jim Johnson, Global Head of Government Relations and Public Policy at TIAA. "Every dollar pulled from retirement savings today is a dollar that's not invested and being multiplied for the future."

Separately, a June 2026 Social Security Confidence Survey by PlanGap found that 69% of Americans aged 45 and older lack confidence that benefits will remain available at current levels - a finding that aligns with TIAA's data and underscores the growing opportunity for advisors to lead structured Social Security planning conversations.

As InvestmentNews has reported, helping clients prepare for potential benefit cuts now requires both analytical rigor and emotional intelligence.

Savings under pressure

The day-to-day financial squeeze is driving measurable behavioral change. According to the TIAA survey, 43% of respondents either cut back (24%) or stopped (19%) retirement contributions in the past year to cover daily living costs.

Just 7% were able to increase contributions over the same period. Twelve percent pulled money directly from retirement savings accounts to fund everyday expenses.

The survey also found that 54% of respondents named the cost of living as the single biggest systemic barrier to participating in the retirement system at all, outranking the complexity of the financial system (29%) and lack of access to employer plans (30%).

These behavioral shifts compound over time, leaving Americans more reliant on Social Security at the exact moment the program faces its most serious structural challenge in decades. As InvestmentNews has covered, retirement uncertainty is accelerating across age cohorts, with those nearest to retirement feeling the most acute anxiety.

What advisors and plan sponsors can do

Despite the pressure, Americans are not passive. In response to the potential Social Security shortfall, 21% said they plan to rely more on personal savings and less on the program, 19% want to increase employer-sponsored plan contributions, and 19% plan to open or contribute more to an individual retirement account. Fifteen percent said they are actively seeking guaranteed lifetime income products - such as annuities - to replace what Social Security may not cover.

That demand signal is particularly significant, according to TIAA's Jim Mullery, Head of Institutional Relationship Management.

"Plan sponsors should respond by making lifetime income a default feature of retirement plans," Mullery said. "Not just an accumulation vehicle, but an engine for generating income that lasts a lifetime."

The role of the financial advisor in bridging this gap is difficult to overstate. When clients do not understand the Social Security shortfall, cannot quantify the impact of paused contributions, and are navigating real financial hardship, the planning conversation becomes more urgent and more consequential.

Data from a 2025 protected income study found that two-thirds of advisors said they had changed their retirement planning approach in the past year, with growing emphasis on annuities and protected income strategies as Social Security confidence erodes.

The TIAA survey also found that 90% of respondents agreed that every American should have access to retirement savings and the resources to manage them - a rare point of bipartisan consensus that Johnson said Congress should not ignore.

"In an era of sharp division, retirement security is a rare area of common ground," Johnson said, "and Congress should treat it that way."

For advisors working with clients today, the TIAA data offers a practical framing: the Social Security cliff is six years away, the savings erosion is happening now, and the window to close the gap through guaranteed income, disciplined contributions, and legislative advocacy is narrowing.

InvestmentNews continues to track how advisors are rethinking income strategies in response to exactly this convergence of pressures.