Two-fifths of older workers are “delaying retirement” because of inflation, markets

There’s a new survey out, and everything about it pisses me off.

Retirement confidence is very low.

Retirement anxiety is the way to go.

Women in particular sacrifice their retirement plans to provide financial assistance to “family members” (adult children, presumably) or friends.

Basic knowledge of retirement is minimal.

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Oh, and obviously, this is all news for people who already run defined-contributory retirement plans in America — 401(k)s and the like. Survey results indicate that they rarely talk to the people on the plan, and they are ignorant of what they are thinking and feeling.

The survey, conducted by Nationwide, focused on workers over the age of 45 as well as plan sponsors who manage their own retirement plans. (It was done this past July and August, so it’s a little behind the curve—more on that below).

“The vast majority of plan sponsors believe that employees have a positive view of the retirement plan and financial investments…and are on the right track when it comes to retirement,” the insurance company Nationwide reports. The percentage of plan sponsors who think employees are happy ranges from 81% to 96%, they report, depending on the question they asked, and whether they’ve spoken to plan sponsors in government or the private sector.

Cue laughter.

In fact, only 58% of these workers are happy. A long way down from 81% to 96%.

Oh, and that number has dropped in a year, even though it was only 72% a year ago.

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Plan sponsors believe that workers are happy with the investment options available in their 401(k) plan. Laborers? not much.

“The majority of plan sponsors feel that the average employee is satisfied with the investment options offered within their employer retirement plan (81% corporate, 94% government),” Nationwide reports, “but this sentiment is only reflected by Just over half of the staff– And in numbers less than 2021.

40% of workers over the age of 45 say they now expect to delay their retirement as a result of the inflation crisis in 2022 and the ensuing financial turmoil. The delays are huge. Across the entire survey, workers over 45 expect to wait until age 68 to retire. A year ago, when markets were booming and inflation was flat, it was set at 65.

S&P 500 SPX Index,
It’s down 18% last year, even including the dividend, while the bond market is down 13%.

Coincidence, A recent study conducted by the Federal Reserve of St. Louis It found that average Americans ages 55 to 74 lost $100,000 in wealth between January and October of last year due to the unrest — and it’s estimated that this loss of wealth prompted 170,000 people over 55 to pull Tom Brady, “Inconvenient” and back in the strong. worker.

Nationwide notes that depression is particularly severe among women. The number of women who expect to postpone retirement, if necessary, indefinitely doubled last year to a staggering 62%. The percentage of women worried about their retirement plan and their investments jumped by half, to 56%.

Among the women who expected to delay retirement, one in six told the survey that they do so because they were financially supporting a family member or friend “as a result of inflation.”

This, at a time when there were nearly twice as many vacancies as there were unemployed.

But it’s no surprise that people panic about retirement when they don’t know how to calculate numbers. Bethany Ebert of Nationwide writes that “nearly half (51%) of female respondents face challenges about converting their retirement savings into income in retirement. Only 4% of women have moderate or very moderate familiarity with retirement planning for squandering.”

Yes, 4%.

Imagine trying to drive cross country without a GPS or a map. This is madness.

It is all too easy to say that these numbers reflect the inflationary panic that prevailed last summer. Indeed, although inflation fears have eased somewhat since then, portfolios have not improved. For example, Vanguard Balanced Index Fund VBAIX,
which follows a typical portfolio of 60% US stocks and 40% US bonds, is actually lower than it was during July and August.

Meanwhile, premium payment rates are falling again, after peaking in October.

Immediate lifetime annuities (sold by insurance companies such as Nationwide) are products that can provide a guaranteed income for life in retirement. So people in their 40s, 50s, and 60s would be depressed by the lower rates—except that no one seemed to bother explaining what those annuities were, or why they might need them.

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