US Workers Increasingly Worried About Retirement Lifestyle Affordability

Even as fears of a recession decrease slightly, more Americans are expressing concern about their long-term financial health and retirement lifestyle, new Allianz Life data from the first quarter of 2023 shows.

The research showed 78% of Americans worry they cannot afford an optimal retirement because of increased costs, compared to 73% in 4Q 2022 and 68% in 1Q 2022, according to the 2023 1Q Quarterly Market Perceptions Study, produced by Allianz Life Insurance Co. of North America.

“A strong retirement strategy will address potential risks like inflation and taxes,” states Kelly LaVigne, vice president of consumer insights at Allianz Life. “You can’t prepare for everything, but you can prepare for anything—if you start preparing for retirement early.”

Recession fears have ebbed, yet 41% of workers are still concerned they will be laid off because of an economic downturn in 2023, the study found.

While 57% of Americans worry about an impending major economic recession, compared to 66% last year, the research showed Americans remain cautious about investing in the current climate. Overall, 63% said they are keeping more money out of the market than they think is optimal, and 62% would rather have their money remain in cash than endure market swings, the research showed.

Allianz Life also found that those in Generation X (ages 44 to 58 in this study) have significant financial worries about their long-term finances and retirement readiness.

“Gen Xers are entering into and in critical years of retirement preparation,” LaVigne states. “Many people are often in their highest earning years in their 40s and 50s and finally able to really save a significant amount of money for retirement. This is when they need to establish strategies and really focus in on how they are setting themselves up for the retirement lifestyle they want.”

For Gen X, defined in the study as people born between 1964 and 1978, the study found elevated levels of financial concern about retirement.

• 43% of Gen Xers worry their employer will suspend their 401(k) match, compared to 38% of Millennials (born between 1979 and 1996) and 24% of Baby Boomers (born between 1945 and 1963);
• 67% of Gen Xers say they are keeping more money out of the market than they should, compared to 66% of Millennials and 54% of Baby Boomers; and
• 85% of Gen Xers worry they might not be able to afford the lifestyle they want in retirement because of the increased cost of living, compared to 80% of Millennials and 72% of Boomers.

Data for the Allianz Life study was gathered via an online survey  conducted in March 2023, with a nationally representative sample of 1,005 respondents aged 18 and older.