Market Volatility Worries Have Eased, but Retirement Concerns Remain

American investors apparently are feeling more confident about their finances than they have in a long time, but concerns about risks to their retirement are lingering, according to a new study from Allianz.

Data from the firm’s Quarterly Market Perceptions Study shows that Americans’ worries about an impending market crash or recession are at their lowest levels since 2018. According to the fourth quarter results, 43% of Americans are worried that a recession is right around the corner, but this is down from 50% who said the same in the third quarter. 

In addition, just 39% of respondents say they are worried about a big market crash on the horizon, which is down from 48% in the third quarter. These numbers had been steadily rising since 2018, before dropping after a relatively calm period in the markets in mid-November, the study notes. 

Despite this current sense of calm, the number of people who say now is a good time to invest in the market continues to decrease, notes Kelly LaVigne, Allianz Life’s Vice President of Consumer Insights. “This may be because people are anticipating more volatility in 2020 and don’t want to take the risks that those major swings can have on their savings and retirement.”

And while people might be feeling better about reduced market risks to their retirement, risks from inflation are top of mind. Nearly half (49%) of Americans worry that rising cost of living is a big risk to their security in retirement and over a third (34%) say that inflation may prevent them from ever being able to retire.

Interestingly, it’s Millennials who are most worried about the impact of rising costs, both now and in their future. They are more likely to say the rising cost of living is preventing them from saving money for retirement as much as they should, registering at 62%, compared with 56% of Gen Xers and 42% of Baby Boomers. 

Millennials are also most worried about being able to pay for necessities like housing or medical care in retirement due to the rising cost of living, with 50% of respondents saying so, compared with 46% of Gen Xers and 35% of Boomers.

“The rising cost of living is a real threat to hard-earned retirement savings, particularly as people are spending more time in retirement,” notes LaVigne, who adds that fewer than 4 in 10 (38%) respondents say they are confident that their financial plan can deal with the rising cost of living.