Americans are waiting for the proverbial other shoe to drop as they experience eroding asset values, inflation, market volatility, inflation and recession fears, according to the new 33rd annual “Retirement Confidence Survey,” a joint project of Greenwald Research and the Employee Benefit Research Institute (EBRI), released today.

“High inflation and a higher cost of living, rising interest rates, a volatile stock market and inflation have combined to lower account values and make it harder to save,” said Greenwald Research CEO Lisa Greenwald in an interview with Financial Advisor magazine.

A majority of those who Greenwald and EBRI surveyed don’t think any of this is going to get better in the next year or so and are afraid a recession is on its way. That’s coloring their outlooks for the near term and their confidence for the long term.

This year’s survey found that only about two-thirds of workers (64%) are confident about having enough money to live comfortably in retirement, down dramatically from 73% one year ago. The number of Americans saying they are “very confident” experienced an even steeper drop, from 28% to 18%, the report found.

“Not since 2008—and there was another sizable drop in confidence in 2009—have I seen things this bad, so if that’s not telling, I don’t know what it is,” Greenwald said.

In all of the research that Greenwald is doing “there is a lot of pessimism about economic conditions. Nearly nine in 10 workers are worried inflation will rise another year, while eight in 10 are worried that the economy is going into recession. One of the drivers of this potentially is a belief by a vast majority of workers and retirees that the stock market is going to become increasingly volatile and unpredictable,” Greenwald said.

Public Trust Erosion
Public trust is another thing that’s eroding investor and retiree confidence: The survey found that 54% of workers and 53% of retirees fear that another public health emergency or lockdown will occur in the next 12 months—almost as if the public thinks such an event is being purposely planned by government officials to be rolled out to coincide with the presidential election cycle.

“It’s significant that over half of Americans are concerned such an event will occur in the next 12 months. I don’t know what is driving the concern except the general malaise that we are living in a world where anything can happen and things are not going in the right direction,” Greenwald said.

The veteran researcher added that “if you connect the dots, it just speaks to uncertainty. This survey has captured fears regarding the economy and policy, but other research we do shows Americans’ stress and anxiety levels are very high as well.”

Here are some of the most telling findings from the EBRI/Greenwald Research study, which surveyed 1,320 workers and 1,217 retirees at the end of January:

• Eighty-six percent of American workers are concerned that inflation will stay higher for at least another year, while 79% of retirees are worried about it.

• Some 80% of workers and 74% of retirees fear the economy will slide into a recession in the next year.

• Eighty percent of workers and 71% of retirees “fear the government will make significant changes to the American retirement system.”

• Eighty percent of workers and 62% of retirees fear that interest rates will continue to rise.

• Seventy-four percent of workers and 65% of retirees believe the stock market will be increasingly volatile and unpredictable.

• Sixty-five percent of workers and 58% of retirees believe the stock market will be lower in 12 months than it is today.

• And 76% of workers and 55% of retirees believe housing costs will rise.

Can Advisors Help?
How can the wealth management industry and financial advisors address these client fears? “I’m sure that advisors are experiencing much of this in their day-to-day life right now when they field worried calls from clients,” Greenwald said. “They’re genuinely worried about these things.”

Ensuring that employers and employer retirement plans deliver sound, long-term advice can be critical, she said. Only about one-third of workers work with financial professionals, Greenwald Research has found.

“Many workers are optimistic they will work with advisors, but the reality is that many won’t. I think that it’s encouraging that more workers cite their employers and retirement plan providers as sources of information, because I think collectively the advice and retirement industries have to provide sound advice to workers who have time on their side,” Greenwald said.

Advice for retirees, however, is going to look different going forward because of the countervailing economic and stock market trends, she predicted. “Right now, retirees have seen account balances drop, and they’re definitely feeling more of inflation on a fixed income. We now see fewer retirees say their goal is to grow their assets and more saying they just want income stability,” Greenwald said.

Some 40% of workers and 58% of retirees reported a decrease in their retirement account balances over the previous 12 months, while 77% of workers and 74% of retirees expressed concern about these losses, the researchers reported.

That has led seven in 10 workers and six and half in 10 retirees to report that income stability is most important to them.

Among workers who made changes to their workplace retirement plan, 37% increased their contributions and 16% switched to more conservative investments. In 2022, only 9% reported moving assets into more conservative investments.

“If Americans, as well as the advice community and retirement industry, believe that volatility is here to stay, that could certainly lead to different allocations for retirees in particular,” Greenwald said.