How Inflation Hurts Retirees

RETIREE confidence in having enough money to live comfortably throughout retirement dropped significantly in the 2023 Retirement Confidence Survey, conducted by the Employee Benefit Research Institute and Greenwald Research.

- JANET BODNAR

The survey recorded its biggest decline since the global financial crisis of 2008. Craig Copeland, director of wealth benefits research for EBRI, explains.

Why the big drop? Inflation has had the biggest impact. Among retirees, 42% said the high cost of living contributed to their loss of confidence and 25% cited a lack of savings. And the two are related.

What's the connection? When things cost more, that leaves less for savings. Nearly 60% of retirees report that their retirement account balances decreased over the past 12 months, and two-thirds worry that the increasing cost of living will make it harder for them to save money. In addition, 58% are concerned they will have to make substantial cuts to their spending. The poor performance of the stock and bond markets also had an impact on retirement balances.