Amid an inflationary economic climate, many Americans are uncertain about their retirement plans, with 27% unsure of their expected retirement date, according to a recent survey on credit activity and consumer sentiment on retirement.
The average interest rate for credit cards has hit an all-time high of 20.6%, despite the fact that there are now 70 million more credit card accounts than in 2019, according to the most recent ScoreSense Market Report, which reviewed credit activity and consumer sentiment on retirement.
Looming credit card debt, mounting medical bills, and a lack of financial planning are challenges that can be particularly daunting for Americans looking ahead toward retirement.
Recent data reveals that more Americans are falling behind on their car loans, consumer loans, and credit card payments than they have in over a decade, per The Washington Post.
Considering these challenges, the survey found that 23% of respondents reduced retirement account contributions due to higher household expenses from inflation.
“The increase in delinquencies and defaults is symptomatic of the tough decisions that these households are having to make right now — whether to pay their credit card bills, their rent or buy groceries,” Mark Zandi, the chief economist at Moody’s Analytics, told The Washington Post.
A significant number of individuals, however, have changed their lifestyles to boost their retirement savings. Some have downsized (20%), while others have sold off assets (19%), and many have taken up additional jobs or side gigs (30%), ScoreSense said in a press release for the Market Report.
Despite full Social Security benefits starting at age 67, only 30% of respondents to the consumer sentiment survey believe they’ll retire on time.
The survey consisted of consumers aged 40-79 who have not yet retired and showed that those between ages 40-49 expressed less confidence in their ability to retire early compared to other age groups.
An alarming 40% of the survey respondents were unaware of the approximate balance of their retirement accounts. Furthermore, the survey revealed that around half of the respondents did not have a clear understanding of how much they would need to retire.
“What I find disturbing from our survey is the large number of people who don’t know what they have or what it will take to retire. While it’s never too late to save for anyone, young people need to create retirement savings accounts that can really blossom over time,” said Carlos Medina, senior vice president at One Technologies LLC, per the press release.