A new survey by New York Life shows that as inflation remains elevated and the cost of everyday goods continues to rise, many adults are cutting back on spending and feel less financially confident.
The New York Life “Wealth Watch Survey” found that 65% of adults report being concerned about the impacts of inflation. Additional concerns include healthcare costs (34%) and the national economic recovery (32%). A large majority (89%) are concerned that there will be a U.S. economic recession soon.
A majority (62%) of adults still report overall confidence in their ability to meet their financial goals, down from an average of 69% at the beginning of the year, the survey states. When asked to describe how they feel about their finances, 30% of Americans are “uncertain” and 29% are “anxious,” but nearly 1 in 3 (28%) are “hopeful” – findings that align to an extent with sentiments at the start of the year, when 28% of adults were “uncertain,” 22% were “anxious” and 39% were “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, New York Life senior vice president, head of insurance solutions, service, and marketing, in a press release accompanying the survey.
Americans report that their top financial concerns are paying for daily expenses such as groceries and gas (39%), monthly bills (36%), and personal financial emergencies (24%), the survey states. 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%).
At the midpoint of the year, top financial concerns have shifted from long-range priorities to nearer-term ones—a change from just a few months ago, when a majority (65%) of those surveyed were prioritizing their long-term financial goals, the release states. Respondents reported drawing an average $616.73 from their savings to cover higher everyday costs.
The top financial goals respondents have made progress on this month include developing and maintaining a financial budget (54%), evening out spending month to month (46%), and eliminating debt (44%), the release states. 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.
“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%),” said Ball.
Younger generations are less confident today than they were six months ago that they will be able to retire at their desired age (Generation Z: 64% vs. 75%; Millennials: 62% vs. 74%), the release states.
The ability to afford a home is a top financial concern for Gen Zers (22%) and Millennials (21%), the release states. Mental health is a concern for 36% of Gen Zers and 32% of Millennials, vs. 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, the release states. Baby Boomers (66%) and men (68%) are more confident in their ability to meet their financial goals compared to other demographics. More parents (58%) sought financial advice in the past month than non-parents (42%).
Despite declining confidence, finances remain relatively strong, and most people have reported a recent financial bright spot, the survey states. More than half (59%) of adults have experienced recent financial bright spots, including paying off debt (19%), going on or booking a vacation (18%), and contributing to savings or emergency funds (17%). Though confidence has declined since January, a majority (64%) of adults expect their retirement savings to last their whole lives—a decrease from January (74%)
“Members of all generations are facing difficult financial headwinds and, as a result, we’re seeing an increased interest in financial guidance—especially among Gen Zers and Millennials. In fact, more than half of respondents in these groups (65% of Gen Zers and 56% of Millennials) have utilized financial advice in the last month,” said Ball. “Regardless of the economic environment, the partnership of a trusted financial professional is critical to ensuring short- and long-term financial goals can be achieved.”