Americans are grappling with mounting concerns about their retirement savings and financial stability, according to the 2023 Q3 Quarterly Market Perceptions Study by Allianz Life Insurance Company of North America (Allianz Life)*.
| Highlights | Key Findings |
|---|---|
| Tax Worries | 72% of Americans are concerned that higher taxes in the future will impact retirement income from tax-deferred accounts like 401(k)s or IRAs. π |
| Market Anxiety | 53% of respondents express fear of another major market crash looming on the horizon. π |
| Cash Hoarding | Approximately 54% of respondents admit to keeping more cash than they think they should, driven by concerns about an impending recession. π° |
Kelly LaVigne, VP of Consumer Insights at Allianz Life, emphasizes the importance of tax strategies in financial planning, saying, “While paying taxes is inevitable, how much we pay in taxes will change.” She suggests that diversifying assets across various tax categories and employing strategic tax deferral can provide more control over the timing and amount of taxes paid.
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Moreover, Americans are seeking assistance in managing tax risk, with 73% indicating that they would change their financial advisor if they did not effectively address tax management in retirement planning. Interestingly, Gen Xers (84%) are more inclined to switch advisors for this reason compared to boomers (67%) and millennials (77%).
Despite their worries about taxes, many Americans also express concerns about retirement income from tax-advantaged sources such as Social Security, with 72% saying they can’t rely on it for retirement planning. Furthermore, 79% are worried about the future of Medicare and Social Security.
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Market Crash Fears and Cash Holding
Although Americans are preoccupied with future taxes, their immediate concerns revolve around the possibility of a significant market crash. While fewer Americans worry about an impending major recession compared to last year, 53% of Americans expect a market crash.
These ongoing concerns are leading Americans to hold more cash, with 54% admitting to keeping excess cash reserves due to their recession fears. Kelly LaVigne points out that while it might feel safe, holding cash for the long term can lead to losses due to inflation.
Millennials, in particular, are the most concerned about economic downturns affecting their personal finances, with 52% fearing layoffs in 2023. This is compared to 29% of Gen Xers and 25% of boomers. Additionally, 57% of millennials are keeping more cash due to recession concerns, compared to 52% of Gen Xers and 46% of boomers.
Inflation concerns have somewhat decreased, with 70% expecting inflation to worsen in the next 12 months, down from 77% in the previous quarter.
*Allianz Life conducted this online survey, the 2023 Q3 Quarterly Market Perceptions Study, in August 2023, with a nationally representative sample of 1,005 respondents aged 18 and older.
(Source: Business Wire)
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