Almost one in three Americans say their finances are in worse shape now than at this time a year ago, up from the 19% who felt that way in 2021.
A new report shows nearly a third of Americans say their finances have deteriorated in the past year and don’t expect much improvement in 2023.
According to the New Year’s Resolutions Study from Allianz Life, almost one in three Americans (29%) say their finances are in worse shape now than at this time a year ago, which is up from the 19% who felt that way in 2021. Along the same lines, the survey’s respondents who say their financial situation is better than last year dipped slightly to 19%, from 22% in 2021. Meanwhile, more than half (53%) say their financial picture is the same, down from 58% in 2021, the survey said.
The primary culprit for this surge in pessimism is the 40-year high in inflation. More than half (52%) of respondents say the increase in their cost of living is the first or second most worrisome threat they face in the coming year, up from 38% in 2021. Furthermore, just over one in three respondents (36%) say rising inflation is the greatest threat to their retirement savings, up from 25% in 2021, according to the Allianz Life study.
“This has been a tough year for Americans with inflation creating havoc with their finances,” Kelly LaVigne, vice president of consumer insights at Allianz Life, said in a statement. “These challenges aren’t going to go away when we flip the calendar, so it is best to make a plan for mitigating ongoing risks to financial stability like inflation and market volatility in the year ahead.”
“The past two years have been challenging for everyone,” said David Scranton, CEO of Sound Income Group. “We started 2020 with a pandemic that continued to affect the world through 2021. This year has been marked by inflation and market volatility. One look at your investment statement or savings account is enough to dampen anyone’s optimism. But we need to remember to have a long-term outlook — bull markets have historically outlasted bear ones.”
The dour news continued elsewhere in the study, with 35% of respondents claiming they felt more financially stressed in the past year. Generationally speaking, Gen Xers (41%) are more likely than millennials (36%) or boomers (27%) to feel more stressed financially in 2022.
Perhaps the lone bright spot in the study is that fewer Americans admitted to having had bad financial habits this year. Americans who say they spend too much fell two percentage points from the prior year. Also, the percentage of Americans who are including financial planning as a New Year’s resolution increased to 18%.
Finally, the report revealed that more people are willing to seek out advice from a financial adviser in the coming year. One in three (33%) Americans say they are more likely to seek out the advice of a financial professional in 2023, compared with just 22% in 2021, the study showed.
“Almost everyone is feeling the effects of inflation this year, whether at the gas station, grocery store or when traveling,” said Alexis Zuccaro, wealth adviser with SageView Advisory Group. “It’s important to review your financial plan to see what changes could be made to achieve financial balance. Thinking about the future is very important, but one must also keep present-day finances in mind. Working with a financial professional can help navigate these challenging times.”