Rampant inflation will result in a delayed retirement for a large swathe of Americans who are concerned about dwindling savings accounts and tight budgets, according to the results of a new survey published this week.
With the costs of daily necessities such as food and fuel hitting record highs, 25% of Americans will need to delay their retirement to account for the reduced savings, according to the quarterly BMO Real Financial Progress Index.
“Prices across the board – from cars and gasoline to groceries and other everyday essentials – are rising at the fastest pace since the 1980s,” said Paul Dilda, the head of consumer strategy for BMO Harris Bank. “Consumers must think differently about their finances in this inflationary environment.”
The impact to retirement plans is just one of several signs of the way inflation has affected American households. Nearly 60% of respondents said inflation was having a negative impact on their personal finances, while 21% said economic conditions had cut into their retirement savings.
More than 60% of Americans aged between 18-34 said they were saving less money while paying more for staple items.
The survey found that about 80% of Americans are changing their daily habits to account for steep inflation – with 46% cutting back on dining away from home and 31% opting to drive less due to record gas prices.
Meanwhile, 23% of respondents said they were spending less on their vacation plans – or canceling them entirely – while 22% were canceling subscriptions to services such as Netflix or their local gym.
BMO’s quarterly index is based on a survey of 3,407 US adults.
Food and fuel prices are two of the largest factors in inflation that hit 8.3% in April. The cost of food rose 9.4% in April compared to the same month one year earlier, while energy costs rose a whopping 30.3%.
Gas surged to all-time highs in May as the Russia-Ukraine war further disrupted shipments – a sign that the upcoming Consumer Price Index could show even higher energy prices when it is released next week.
Another survey recently found that American travelers are now more concerned about gas prices and overall inflation than they are about COVID-19 case rates in their destinations.
President Biden met with Federal Reserve Chair Jerome Powell on Tuesday as the central bank initiates its plan to tighten monetary policy in an effort to cool prices.
In a separate development, Treasury Secretary Janet Yellen admitted that she was “wrong” when she initially downplayed inflation as a temporary issue that would resolve itself without the Fed’s intervention.