Millions of Americans are finding it difficult to plan for their financial future due to the ongoing inflation crisis, according to a recent survey. Which is very worrying in 2024. Chloe Lloyd, who works at a research and consulting firm in Washington, DC, wasn’t saving for retirement until recently. Financial planning for retirement was not on his to-do list. Chloe is not very old, though. This 25-year-old young woman told Yahoo Finance, ‘Life is a struggle. Not just me, but many young people from the generation like me have had their careers delayed due to the pandemic.
Then, high inflation reduced my ability to save for retirement. In this era of high inflation, we don’t know how tomorrow will go. In this situation, how can I think about saving for the future? News from Yahoo Finance
Chloe eventually joined a pension fund. He deposited $25 every Monday in a US pension fund called the Roth IRA. This amount is automatically deducted from his account. He said, ‘It feels good to accumulate money; I wish to add more money to this fund; but it is not possible to do that. I’m just trying to meet the necessary expenses.’
For many other young Americans, like Chloe Lloyd, high inflation is preventing them from saving money. That is, they are unable to prepare for retirement. Many people have stopped saving for retirement; many have reduced the deposit amount. Many are taking loans from pension funds or withdrawing the entire amount, unable to meet the expenses. In 2023, the most popular U.S. pension fund, Vanguard 401(k), saw the highest number of people withdraw or borrow money in history.
It is true that various pension funds in the country have swelled due to the strong US stock market this year, including last year, but there is a negative side to this situation.
Joshua Hodges, chief consumer officer at the US National Council on Aging, said the current retirement savings situation is a mess.
While a lot of people are able to accumulate substantial retirement funds, a lot of people find that high inflation prevents them from saving much.
It’s likely that the lives of people who choose not to participate in US employers’ automatic retirement plans are in such disarray. This number is 56 million.
For the past two years, high inflation has prevailed all over the world, including the United States. From gasoline to home renovations to rent, everything costs more. According to the latest figures from the US Department of Labor, the inflation rate in the country was 3.2 percent in March 2024.
Results: A survey by Allianz Life Insurance Company for the first quarter of 2024 found that 7 out of 10 people in the United States have reduced their contributions to pension funds due to high inflation. Two out of every three are concerned about paying service charges, but not so much about retirement savings.
Another troubling news is that two in five Americans say high inflation has forced them to give up their retirement savings.
Analysts say at least 15 percent of income should be saved every year, including contributions from the individual level to institutional ones. This is a good target for most people. There is no problem if the amount of savings is small in the beginning; it can be increased later.
Some suggest saving 10 times your pre-retirement income before age 67. For that reason, they suggest savings equal to 1 year’s income by the age of 30, 3 years by 40 years, 6 years by 50 years, and 8 years’ income by 60 years. But all this will depend on inflation. The fact that it is a silent killer is evident from the state of retirement savings in countries like the United States.
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