Parents’ Retirement Confidence Deflated by Inflation

(PlanSponsor) - Rising inflation is shaking retirement confidence for parents, according to data from the Nationwide Retirement Institute.

The Nationwide Financial Family Finances Flash Poll found that, amid rising living costs, 48% of parents are not confident they will be able to save enough money for retirement. The research shows weakened retirement confidence rises to 63% for parents who are members of Generation Z.

The Nationwide data highlight discrepancies between the financial goals among all parents, the top financial goals for Gen Z parents and the largest financial challenges for all parents and Gen Z parents, including retirement.  

While the Nationwide survey did not note that the inquiry would specifically examine Gen Z parents’ outlooks versus those of all U.S. parents, the data show that notable differences emerged between Gen Z parents and older generations. 

Among all parents, 52% somewhat or strongly agree that they are confident in their ability to save enough money for retirement, compared with 37% of Gen Z parents, data show.

The poll also found that despite challenges to parents’ retirement confidence, only 10% of all parents decreased their retirement plan contributions over the past year, and 6% of Gen Z parents did the same. Furthermore, 9% of all parents withdrew funds or took a loan from their retirement savings versus 6% of Gen Z parents, and 6% of all parents delayed setting up a retirement fund versus 5% of Gen Z.  

Nationwide data support that Americans generally feel anxious about their finances, said Kristi Rodriguez, senior vice president of Nationwide Retirement Institute, in a statement.

“With the cost of living high and fear of a recession looming, parents’ confidence in their family’s financial situation is waning,” she said.

Nationwide found that the top financial goals for all U.S. parents are saving for retirement (54%), paying off debt (51%) and saving for a child’s education (43%), whereas saving for retirement was the highest priority for only 21% of Gen Z parents, while paying off debt was cited by 35% and saving for a child’s education garnered 42%.   

Among all parents, 20% said that not being on track for retirement is a top financial challenge, compared with 7% of Gen Z parents, data show. 

The research also found that for Gen Z parents, top financial goals are saving for educational needs (42%), building credit (42%) and buying a home (40%). Black U.S parents are focused on building credit (39%) and improving financial literacy (23%).

“Gen Z parents are more concerned than average about paying for gas, housing costs, inability to support family, childcare expenses, and unemployment/job loss,” the Nationwide poll report states.

Nationwide also found that one way plan sponsors may encourage greater retirement contributions from all parents and Gen Z parents is by providing access to a retirement account that would allow individuals to withdraw up to $1,000 for emergencies. Among all parents, 72% said it is likely or very likely that they would contribute to such an account, compared with 59% of Gen Z parents.

The survey found less difference among all parents and Gen Z parents with regard to inflation and the rising cost of living; among all parents, 60% agreed that inflation is their top financial challenge, compared with 44% of Gen Z parents. Paying for gas followed, for 39% of all parents and 52% of Gen Z parents, and managing debt was third, at 36% of all parents and 27% of Gen Z. 

The survey also revealed that parents’ most-used resources for advice or support are family and friends (56%) and prayer (29%) over a professional adviser (27%).

“It’s understandable that families are looking for comfort during this difficult time, whether with friends and family or through their faith, but the most important step they can take is to connect with a financial professional and create a plan,” said Rodriguez.

The survey was completed by Edelman Data and Intelligence, which conducted an online survey on behalf of Nationwide with 1,000 nationally representative adult U.S. parents ages 18 and over with children under 18 and 150 Gen Z parents with children under 7. The survey was fielded from July 11 to July 21.

By Noah Zuss
August 25, 2022


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