Schroders’ Retirement Study Finds Inflation Taking Toll on Retirees

With inflation remaining stickier than anticipated, the impact of rising prices lessening the value of savings is weighing heavily on the minds of retirees. According to the Schroders 2024 US Retirement Survey, less than half (44%) of Americans in retirement believe they have saved enough, 24% are unsure, and 32% are convinced they have not accumulated enough savings.

Among the top concerns facing retired Americans are (% at least slightly concerned):

• Inflation lessening the value of assets (89%)
• Higher than expected healthcare costs (85%)
• A major market downturn significantly reducing assets (76%)
• Not knowing how to best generate income and/or draw down assets (69%)
• Outliving assets (68%)

Further, one-in-three (33%) retirees are concerned that financial stress will impact their overall health and 26% have lost sleep worrying about their financial situation.

“Whether it’s a trip to the gas station, grocery store or pharmacy, prices in the U.S. have increased noticeably in recent years, and that is particularly challenging for retirees living on fixed income sources,” said Deb Boyden, Head of U.S. Defined Contribution at Schroders. “The challenges facing retirees today are further evidence of the retirement savings crisis. For younger generations with longer time horizons, now is the time to prioritize saving for a brighter future.”

Nearly half (47%) of all retirees report their expenses in retirement are higher than they expected, and 49% believed Medicare would cover more of their healthcare expenses. On average, retired Americans report spending 14% of their total monthly income on healthcare costs ranging from insurance premiums, out-of-pocket expenses, prescription costs, and more.

Notably, most retired Americans (58%) admit they have no idea how long their savings will last, and 63% wish they had done more planning prior to retiring.

Percentage of Retirees “Living the Dream” Matches Those “Living the Nightmare”

When asked to describe their financial situation in retirement, results are varied:

• 4% are “living the dream”
• 44% are “comfortable”
• 34% are “not great but not bad”
• 15% are “struggling”
• 4% are “living the nightmare”

Across all retirees, a larger percentage are using a pension plan (38%) or spouse’s pension plan (34%) to generate income in retirement than a 401k, 403b or 457 plan (22%) or spouse’s 401k, 403b or 457 plan (24%).

“The corporate pension plans that are being relied upon by today’s retirees may not be there for all retirees in future generations,” said Boyden. “This shift in how Americans will be meeting their expenses in retirement moving forward underscores the urgency for bolder actions from retirement savers, plan sponsors and asset managers. We can and should do more to improve the economic security of tomorrow’s retirees.”

About the Survey

The Schroders 2024 US Retirement Survey was conducted by 8 Acre Perspective among 2,000 US investors nationwide ages 28-79, including 498 retired Americans. The survey was conducted from March 15 to April 5 in 2024.

For more information on the Schroders 2024 U.S. Retirement Survey, visit here.

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