RETIREMENT SURVEY & INSIGHTS REPORT 2022

Navigating the Financial Vortex

October 12, 2022 | 5 Minute Read

Introduction

Investors face a complex backdrop due to rising interest rates, high inflation and market volatility, creating a challenging environment to generate sustainable income, and causing a strain on one’s finances.

This year’s Retirement Survey & Insights Report, Navigating the Financial Vortex: From Retirement Readiness to Retirement Income, outlines these hardships and considers possible paths forward. Our report explores the diverse needs of two key audiences: those still working and those who have already retired.

In the first section of our report, Reinforcing Retirement Readiness, we explore how individuals need to maneuver through a financial vortex of competing financial priorities, life events and planning assumptions. The survey findings show notable differences between Generation X, Millennials, and Generation Z when it comes to their most pressing concerns, savings levels and value of advice in planning for a comfortable retirement.

The second section, Making Sense of the Retirement Income Quagmire, covers how retirees are managing their retirement income and spending needs in the face of numerous negative financial forces. Not surprisingly, retired respondents feel insecure in their ability to generate retirement income. Many retirees have fallen short of their savings goal and need to “make do” with what savings they have accumulated.

These challenges are an opportunity for plan sponsors to provide solutions that meet individuals where they are on their retirement savings journey with personalized education and advisory support services.

Methodology & Respondents

We evaluate survey responses from both working and retired Americans to understand the realities of preparing for and living in retirement. Our goal is to learn about the financial obstacles individuals need to overcome and the lessons they can apply. Our Retirement Survey & Insights Report includes key findings that we hope will help plan advisors and plan sponsors better prepare their employees for retirement.

Our findings are from 1,566 individuals surveyed in July and August 2022 and provide insights from a diverse set of perspectives, including (i) working individuals (967 working individuals across generations—working Baby Boomers, Generation X, Millennials, and Generation Z), (ii) retired individuals (599 retired individuals age 50-75) and (iii) gender and generational breakdowns for both populations.

1,566 Total Respondents

Report Sections

Section 1:

Reinforcing Retirement Readiness

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Section 2:

Making Sense of the Retirement Quagmire

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By the Numbers

The infographic summarizes important statistics from the Retirement Survey & Insights Report 2022. Learn more about stress levels, top challenges and concerns from working individuals and retirees

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Key Survey Findings

Realities of Retirement

More than half (51%) of retirees report their current income is less than 50% of their pre-retirement income.

Reaching retirement with sufficient savings is a challenge that is only getting more difficult for working generations. Unfortunately, many fall short of the savings they need to generate income for a comfortable retirement.

The Forgotten Generation

A significant portion (65%) of Generation X are stressed about managing their retirement savings and over 50% feel they are behind schedule with their savings.

Generation X is often viewed as the forgotten generation, bridging Boomers and Millennials, and can be overlooked when addressing the financial challenges each generation must navigate. Now they face a tumultuous macroeconomic backdrop as their time to close any savings gap continues to narrow.

Top Concerns

Inflation and Generating Retirement Income Are the Top Concerns For Retirees.

Retirees face a confluence of factors in retirement that can affect their ability to generate income. They report that they are most concerned about inflation (71%), meeting future healthcare needs (51%) and potential reductions in Social Security (46%).

Growing Appetite for Advice

Nearly all working respondents (95%) believe financial help is important to prepare for retirement.

The challenges with saving for retirement over a 40-year career has driven the need for financial help (counseling, advice and guidance). For those offering retirement plans today, providing financial help that is both broadly available and personalized to support individual circumstances is an important plan design consideration.

Conclusion

Navigating the financial vortex requires managing an ever-increasing set of financial priorities and complexities. How much to save, how to invest and how to adjust the strategy to stay on track are critical considerations for savers.

For retirees, navigating the financial vortex requires managing their spending in the face of rising interest rates, high inflation, and volatile markets in the effort to maintain their savings for an uncertain period of time. Though retirement should be a time to enjoy one’s savings, many are forced to live conservatively and navigate competing needs.

Generation X is in the Heart of the Financial Vortex

Gen X is forced to juggle all the financial priorities while needing to save for their own retirement. Many are homeowners, parents, caretakers, sometimes viewed as the “sandwich generation,” currently in the prime of their career and at a critical stage of retirement savings and preparation. They report being behind in their retirement savings and having higher levels of stress and anxiety. They are most likely to have significant retirement balances and therefore are most susceptible to market volatility and inflation. And while they have some time before retirement, the time to get their savings on track is narrowing.

Growing Appetite for Advice to Navigate the Financial Vortex

Financial complexity is a reality many face. The issues that started with Gen X carry through and peak with Millennials, and we can see the trend continuing with Gen Z. The challenge for plan sponsors is to consider how to meet employees where they are on their retirement savings journey with resources that can be customized and personalized to adapt to their circumstances.

Inflation is Top Concern and Drives Uncertainty in Retirement

Inflation is not surprisingly the top concern for retirees. Needing to spend more on the same goods and services due to rising prices, coupled with the concern of depleting savings, has led many to cut back. As a result, how to generate retirement income is the top challenge where retirees need and want financial advice in hopes to generate consistent and stable income to enjoy those coveted retirement years.

Part-Time Work Could Help Alleviate Retirement Income Concerns for Future Retirees

While leaving a steady paycheck was the top concern entering retirement, part-time work was the top preferred source of generating retirement income for those approaching retirement. While it may not be possible for some to work part-time in retirement, it highlights the desire to have more control over generating income in retirement and can add a sense of security, particularly in volatile times.

Evolving Role of the Employer in Retirement Income

The importance of financial education and advice is clear, and financial advisors are regarded as the most important source of these in retirement. While employer-sponsored retirement plans are a top source of education during the accumulation phase, there is a sharp decline in this view for those in retirement. For plans seeking to expand their plan offerings to be more supportive for retirees, addressing the unique needs retirees face and providing resources to personalize the retirement income strategy to fit their situation are important considerations.

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Retirement Survey & Insights Report 2022: Navigating the Financial Vortex

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Views expressed discussed are those of survey respondents, compiled by Goldman Sachs Asset Management as of August 31, 2022.

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Date of First Use: October 12, 2022. 292150-OTU-1675097.