The lack of personal and retirement savings caused by inflation, rising housing costs, and mounting household debt have changed consumer behavior and lifestyles. While some Americans are cutting spending, others are taking on a second job or devoting less to debt repayment.
Related: The average American faces one major 401(k) retirement dilemma
MassMutual released its Q3 2024 Consumer Spending & Saving Index today and found that inflation, the 2024 Presidential Election, and retirement contributions are among the top concerns that impact personal finances.
The lack of disposable income and the ability to save has impacted life milestones, such as paying off student loans, raising a family, and retirement. Although U.S. consumers feel more confident in the economy, 73% still believe a recession would impact their day-to-day finances.
Saving for retirement is a top concern, and GenX is feeling the squeeze
Only half of American workers believe they’re on track for their retirement plan, and 25% don’t think they’ll be able to pay off all outstanding debts by the time they retire.
Over 55% of Gen X workers note that they aren’t on track with their retirement savings, more so than any other generation. Bruce Tanahill, JD, CPA/PFS and Director of Estate & Business Planning at MassMutual, explains why Gen X feels farther behind on their finances than their younger counterparts.
“Gen X’s ability to save for retirement has been reduced by the dot com crash in 2000, the Great Recession, and the pandemic,” he said. “Gen Xers can increase their retirement savings by taking advantage of employer-sponsored retirement and increasing 401(k) and IRA contributions to maximize employer match.”
More on retirement:
- The average American faces one major 401(k) retirement dilemma
- How your mortgage is key to early retirement
- A few simple tasks can can help you thrive in retirement
Younger generations also face barriers to saving for retirement due to soaring student loan debt and skyrocketing housing costs. These financial burdens prevent Millennials and Gen Z from reaching milestones like buying a house or having children.
One in four (23%) Millennials and Gen Zers note that they don’t plan to have kids due to the financial cost of having a child. 43% think they can’t afford to have children and would enjoy more financial freedom without them.
Parents agree, with 38% of parents with children under 18 stating that having children hurt their finances, and most parents (51%) note that their biggest source of anxiety is not being able to support their family financially.
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How inflation and politics impact consumer confidence
Most Americans cite the economy and inflation as the most influential factors determining their vote for president in November.
84% of workers are worried about how the result of the 2024 Presidential election will impact their finances, though nearly half (48%) are optimistic about their future financial situation.
Related: Dave Ramsey explains how your mortgage is key to early retirement
The University of Michigan Consumer Sentiment Index also showed that consumer expectations for their future improved between July and August 2024, a jump in confidence some are linking to the presidential election.
According to the survey, 41% of consumers see Kamala Harris as the better candidate for the economy, while 38% feel the same about Donald Trump.
Joanne Hsu, Director of Consumer Surveys at the University of Michigan, expects consumer sentiment to fluctuate leading up to the election, depending on how candidates are polling.
Related: Veteran fund manager sees world of pain coming for stocks
