Despite Rising Inflation, Americans Remain Hopeful About Their Financial Future

Despite the increasing cost of goods, a majority of Americans remain hopeful about their financial future. A New York Life Wealth Watch Survey found that 62% of adults have overall confidence in their ability to meet their financial goals. This is down from 69% at the beginning of the year, but nearly 1 in 3 (28%) are still “hopeful.” When asked to describe how they feel about their finances, 30% of Americans are “uncertain” and 29% are “anxious,” but nearly 2 in 5 (39%) are “hopeful.”

“The financial picture for many Americans has changed significantly since the start of the year, and we’re seeing the positive expectations many Americans held about their finances heading into 2022 start to fade,” said Aaron Ball, Senior Vice President, Head of Insurance Solutions, Service, and Marketing, New York Life. “Our research found that macroeconomic factors, including inflation (65%), healthcare costs (34%), and the national economic recovery (32%) are the factors that Americans report as being most impactful to their personal sense of financial security. Three-quarters of those surveyed report that inflation has impacted either short- or long-term financial strategies, and nearly 9 in 10 adults (89%) are concerned about a potential economic recession in the U.S.”

These findings are consistent with other recent surveys which have found that a majority of Americans are worried about the economy and their personal finances. The reality is that many families are still struggling to make ends meet even as the economy continues to recover from the pandemic. While there is reason for optimism about the future, it’s clear that many Americans are still feeling insecure about their financial situation.

Many Americans feel that it is important to have short-term financial goals.

The survey has revealed a shift in priorities from long-range goals to nearer-term ones. 39% of respondents reported their current concerns as paying for daily expenses like groceries and gas, 36% for monthly bills, and 24% for personal financial emergencies. These results represent a change from just a few months ago, when a majority (65%) of those surveyed were prioritizing their long-term financial goals. The survey also found that respondents were drawing an average of $616.73 from their savings to cover higher everyday costs. These findings suggest that Americans are feeling the pinch of inflation and the overall rising cost of living. While long-term financial planning is still important, it appears that short-term concerns are taking precedence for many people at the moment.

The top financial goals on which respondents made continued progress this month include developing and maintaining a financial budget (54%), evening out spending month to month (46%), and eliminating debt (44%). To cut back on spending, nearly half (45%) of Americans are reducing dining out and ordering from restaurants, reducing travel and vacations (39%), and reducing event attendance (37%). Nearly half (47%) of adults said they have made some progress recently on saving for retirement, but 32% say they have made no progress on this financial goal. However, the majority of respondents said they are confident in their ability to save for retirement (53%), even if it takes longer than initially planned. These findings suggest that although many Americans are making progress on their financial goals, there is still room for improvement when it comes to saving for retirement.

“Americans are certainly factoring the economic environment into their short-term financial strategies by cutting back on discretionary spending. Fortunately, we are still seeing many adults maintain current financial habits over the last couple of months, including investing in the stock market (30%) and spending on home renovations (25%),” continued Ball.

People have different opinions and priorities depending on their demographic group.

Younger generations are less confident than they were six months ago that they will be able to retire at their desired age. The ability to afford a home is a top financial concern for Gen Zers and Millennials. Mental health is a concern for 36% of Gen Zers and 32% of millennials, compared to 23% of all adults. Gen Zers (82%), millennials (67%), and men (70%) are more likely to be confident that their retirement savings will last the rest of their life, compared to other demographic groups. Baby Boomers (66%) and men (68%) are more confident in their ability to meet their financial goals compared to other demographics. 58% of parents sought financial advice in the past month, compared to 42% of non-parents.

Despite people’s declining confidence, finances remain relatively strong. Most people have reported a recent financial bright spot.

More than half of adults have had good things happen to them financially recently. This includes paying off debt, going on or booking a vacation, and contributing to savings or emergency funds. Even though confidence has gone down since January, most adults expect their retirement savings to last their whole lives.

The economy may be in a state of flux, but that doesn’t mean people are any less interested in their finances. In fact, according to the New York Life study, more and more people from all generations are turning to financial advisors for help. If you’re looking for short- or long-term financial stability, it’s important to find a trusted advisor who can partner with you on your journey. Check out our Personal Finance section for tips and advice.

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