Interest money

Will inflation cause a tendency towards “non-retirement”?

How do you feel about retirement? According to the Employee Benefit Research Institute’s 2022 Retirement Confidence Survey (RCS), pretty good.

Jill Schlesinger

“More than 7 in 10 workers are at least somewhat confident, including nearly 3 in 10 who are very confident,” and retirees are also optimistic, “with nearly 8 in 10 confident they will have enough money to live on. comfortably throughout the retreat, including 1 in 10″. 3 who are very confident.

These numbers are virtually unchanged from the previous year’s results, but notably, the survey period was conducted from January 4 (a day after the S&P 500 reached its all-time high) through January 26. 2022.

The period included the wave of fear around inflation, but the Fed had yet to start raising interest rates, Russia had not invaded Ukraine, and the vast stock and bond markets were not not entered corrective/bearish territory.

In other words, things were much better at the end of January 2022 than they are now, around the middle of the year.

The RCS results revealed that among those who feel less confident, inflation and the costs associated with mere survival are cited as the reason for their declining confidence in retirement – ​​and inflation anxiety n has only increased over the months since the survey period at the beginning of the year.

According to the New York Fed’s Consumer Expectations Survey, “near-term inflation expectations have continued to rise,” with most consumers expecting short-term inflation to remain high over the next year.

To manage the higher cost of living, many are spending the excess savings they have accumulated during the pandemic. Just over two years ago, during the first and most severe part of the lockdown, the US personal savings rate soared to a staggering high of 33.8%.

Of course, this rate was not sustainable and by December 2021 it had slipped to 8.7%, higher than the 7.3% rate recorded two years earlier in December 2019. But with inflation near a peak four decades, the savings rate fell to 4.4. % in April, a 14-year low. (Amid the mid-2005 euphoria around housing and financial markets, the savings rate plunged to 2.1%).

Given the inflationary pressure on households, one would expect older Americans who left the workforce amid COVID to return, especially those over 55. These so-called “non-retirements” have increased since the summer of 2021, according to Nick Bunker, an economist at

Yet there does not appear to be a massive rush in the job market for the over-55s, whose participation rate was 38.9% in May, 1.4% below the February 2020 level (The rate for workers aged 25 to 54 is just half a percentage point lower than it was before the pandemic.)

Maybe the new and already retired are doing well financially. Writing in Morningstar, Mark Miller, founder of the excellent newsletter and website Retirement Revised, cites a study by JPMorgan Asset Management, which finds that older people “spend less in all categories except care health and charitable contributions.

This makes sense, given that these people no longer commute to work and often own their homes either outright or with a fixed rate mortgage, which can protect them from the worst aspects of rising prices.

The game-changer for older Americans, according to Miller, is Social Security, which “is a critical source of protection against the impact of inflation. Unlike almost all other sources of retirement income, Social Security benefits adjust each year to reflect consumer prices. While we may see more people between the ages of 55 and 67 not retiring, the same may not be true for those who qualify for Social Security retirement benefits, at least for the moment.

Jill Schlesinger, CFP, is a CBS News business analyst. A former options trader and CIO of an investment advisory firm, she welcomes comments and questions at [email protected] Check out his website at