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Afraid rising cost of living will kill your retirement goals? You’re not alone  


New year, higher expenses? Rising cost of living is scaring some Americans looking to save for retirement. 

Four in 10 Americans said they were more stressed at the end of 2023 than the year before, up from about a third of people in 2022, according to Allianz Life Insurance Company of North America’s 2023 New Year’s Resolution study .

Day-to-day expenses, low income (including retirement income) and overbearing debt were to blame for that stress. Inflation also played a role — 69% of Americans said they were afraid the rising cost of living would impact how much they can save for retirement  

The survey included more than 1,000 responses from Americans 18 years and older. 

Student debt repayment was a roadblock for many of the respondents. Of those making student loan payments, two-thirds said they have or will have to cut their retirement contributions as a result.

Student debt may be a deterrent to retirement savings, but workers should try to balance both long-term savings goals with their repayment plans, when possible. Small recurring savings toward future goals, like retirement, take advantage of compound interest, which is when contributions, interest or investment returns build upon themselves to amass a larger nest egg eventually. Workers with an employer-provided retirement account, such as a 401(k) plan, might also lose out on employer matches. Even minimal contributions are better than none at all, financial advisers have said.

Retirement was top of mind for at least a fifth of respondents, who said they were currently employed but likely to retire sometime in the new year. Survey participants said their retirement-related resolutions included downsizing their current spending, using a financial product that would protect them from market volatility and creating a plan that targeted rising costs of living. 

To combat inflation and the effect it has on everyday expenses, savers will need to prioritize, said Andrew Herzog, a certified financial planner and associate wealth manager at The Watchman Group. Spending on streaming subscriptions or a new car payment only works if those expenses don’t come at the cost of future financial security, he said. For those worried about rising costs of living, set up automatic transfers into savings accounts first — then spend excess on fun purchases. 

The new year is a good time to reorder spending. “The old adage of ‘paying yourself first’ goes a long way,” Herzog said. “If you prioritize the future (both short-term and long-term goals) over present day luxuries, you’re building the habits of self-control and sacrifice. Don’t be cheap, be responsible.”

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