Most people view their finances in two ways – perception and reality. While they might perceive their situations one way, there are the everyday realities of budget, job security, inflation, interest rates and so on. But a third variable is confidence. And a New York Life Wealth Watch survey shows that 66% of American adults are confident in their ability to reach their financial goals.
In fact, 54% of American adults met or exceeded savings goals in 2022, on average reporting an aim to save $5,437 but in reality saving $5,011, according to the survey – not a bad number by any stretch of the imagination given the volatile year that passed.
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"Over half achieved or even exceeded their 2022 savings goals, which is no small feat," says Suzanne Schmitt, Head of Financial Wellness, New York Life. "Americans, while feeling stressed about the macroeconomic environment, are finding ways to adapt their financial strategies to cope and are taking on a protection-oriented mindset to enable financial resiliency… we recognize people are very focused on shoring up savings, even though each individual's motivation for doing so may differ."
Breaking out the numbers by gender:
- 37% of men are hopeful, compared to only 28% of women.
- 39% of women feel stressed, compared to only 26% of men.
- 26% of men feel on track towards a goal, compared to only 17% of women.
- 36% of women feel anxious, compared to only 26% of men.
Also, 77% of adults report feeling confident they will be able to retire at their desired age and 63% of adults feel more or similarly prepared for retirement compared to their peers. Some of those people (3 in 10) have money invested in the stock market or mutual funds and 31% of those are planning to make changes in their investment portfolio this year.
Schmitt says this behavior is consistent in economic cycles such as the one the US economy is experiencing now. Adds Schmitt: "During periods of high inflation, investors may decide to move their money to assets that benefit from inflation or pull back on investing altogether. This number is fairly consistent when we compare to data from 2022: Wealth Watch data gathered in October found that 30% of those who have money invested had made changes to their investment portfolio in the past six months with the top reasons being because of a reaction to the stock market (35%), an increase/decrease in level of investment risk (33%), and the costs of goods/services rising due to inflation (28%)."
She adds that market volatility and uncertainty are good reasons for investors to "stay the course."
Role of the Employer
As Americans navigate continued high inflation and a potential recession, employers and financial advisors have a role to play to support individuals in shoring up their financial foundation, protect against unexpected shocks and reach their financial goals. "Employers should take a diagnostic approach to understanding diverse workforce needs and aligning solutions and offerings to meet those needs, so that they can help with engagement and adoption, enabling outcomes for individuals and their families, as well as the broader organization," explains Schmitt.
And according to the survey, more than 1 in 5 adults report they are seeking guidance to help them adapt their financial strategy to achieve their financial health goals in 2023, including: debt management, building emergency savings, and saving for retirement.
Related: Financial wellness: Tailoring a program to specific employee needs is key
Of course, there is no one size fits all solution to strategy. Schmitt adds that, "While debt is a barrier to financial wellbeing at any life stage, it could prove to be a bigger challenge for those nearing retirement and struggling with inflation as the rising costs of goods and services may mean less income is available to fund retirement needs or to pay down debt."
She says financial wellbeing is personal and advisors need to create a relationship with clients that is well-rounded, and includes conversations about not just their needs, but the needs of their families, their priorities, challenges and goals.
"Employers and financial professionals alike should continue to encourage a well-rounded financial wellbeing strategy, inclusive of protection-oriented solutions, access to education and trusted guidance," explains Schmitt. This will ultimately help employees and clients build a strong financial foundation, focusing on short-term goals like paying down high-interest debt and protecting against financial shocks, in order to enable long-term goals, including financial security to and through retirement.
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