Americans say they’re recovering from pandemic financial losses despite falling savings rate

Despite the major disruption to the economy posed by COVID-19, new research suggests that most Americans feel good about their finances. The Northwestern Mutual 2022 Planning & Progress Study, which surveyed 2,381 American adults, found that while 60% of Americans say the pandemic affected their finances, around 43% of people say they’ve now recovered from all financial losses, and only 30% say they haven’t. Additionally, 73% of respondents report that their financial habits have improved because of the pandemic, and around two-thirds of Americans say they’re financially secure or are confident they will become financially secure. 

However, savings and financial prudence measures are down compared to last year: average personal savings sit at $62,000 in 2022, compared to $73,000 in 2021, according to the report. Fewer Americans this year say they’ve developed new financial health habits like reducing their living costs and paying off their debt.

“There could be several factors contributing to the drop in savings from last year ranging from spiking inflation to people spending more as they resume some sense of normalcy in their lives,” says Northwestern Mutual executive vice president Christian Mitchell in a press release. “But it bears watching because while people say they plan to continue saving at an elevated rate going forward, intentions don’t always follow through to action.”

Worries about inflation and the economy remain prevalent, especially as it relates to retirement viability. A third of all Americans think inflation will last beyond 2022, and less than half would call the economy strong. Respondents say inflation and the economy are major concerns for their retirement.

Mitchell notes that having a financial plan can be a key way for people to increase their savings and financial stability – a finding backed up by the report, which shows that people who used financial advisors were less anxious about money and more likely to sleep better. Mitchell calls the correlation “a pretty distinct link between financial wellness and overall wellness.”

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The research also found that younger individuals, including Millennials and Gen-Z, were more likely to experience anxiety about their finances. But population trends suggest that could soon change: while some 18% of all survey respondents say they had started working with a financial advisor since COVID-19 began, that number sat at 29% for Gen-Z and 24% for Millennials, suggesting more young people are seeking out assistance in financial planning.

“Regardless of age, the goal is to have clarity on what you will need in order to enjoy the things that make you happy in life – from the simple pleasures such as a daily cup of coffee to the larger milestones like a comfortable retirement, and everything in between,” Mitchell says.