Even as a record number of Americans are reaching retirement age, many adults have not considered the impact that inflation and Social Security benefits will have on their financial future.
A new global survey by Prudential found 89% of wealthy U.S. adults polled said they are confident they’d be able to cover essential costs in retirement. Yet the rising cost of housing, groceries and health care can eat into savings — and just 55% of U.S. respondents said they’ve factored inflation into their retirement planning.
It’s a “confidence paradox,” said Caroline Feeney, global head of retirement and insurance for Prudential: “Feeling ready is very different than actually being ready.”
“People feel ready, so they’re not taking the necessary action and plans now to start saving and leaning into closing what may be a real retirement gap for their futures that they’re not aware of,” she said.
It’s an important distinction, especially as the baby boomer generation hits “peak 65.” More than 11,200 individuals are turning 65 every day through 2027, according to a January 2024 paper from the Alliance for Lifetime Income.
The consumer price index, a key inflation gauge, rose 3% in September from a year earlier, according to the Bureau of Labor Statistics.
Meanwhile, the Social Security cost-of-living adjustment for 2026 will be 2.8%. The adjustment, meant to help ensure benefits keep up with inflation, will add about $56 a month on average to retirement benefit payments starting in January.
But retirees’ spending has outpaced inflation in recent years, according to research from Goldman Sachs Asset Management. And Prudential’s survey showed 63% of U.S. respondents are concerned about government programs such as Social Security being able to pay benefits when they retire.
Prudential’s survey, conducted online by Brunswick Group in August, included 4,200 adults age 30 and older in the U.S., Brazil, Mexico and Japan. Respondents had $100,000 or more in investable assets or the equivalent amount in each country.
How to get a better sense of retirement needs
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Many people are initially “very optimistic” about their retirement, said certified financial planner Uziel Gomez, founder of Primeros Financial in Los Angeles, who works primarily with Gen Z and millennial clients.
They’re “thinking that they could cut down expenses when they retire,” said Gomez, who is a member of CNBC’s Financial Advisor Council. “When in reality, they usually spend more because they have more time to do a lot of the things that they enjoy doing.”
More than half, 54%, of Americans in a new survey by Principal Financial Group said they believe their financial situation will improve during their lifetime, but the same share said they still fear running out of savings once they retire. The survey polled 1,000 U.S. adults in spring 2025 who described themselves as having sole or shared responsibility for household financial decisions.
“If half of the people feel they are well set on their path, I think what they’re really asking for is more tools for them to live through retirement. But the other half has very low confidence they’ll get to their destination, and they need more encouragement on saving,” said Kamal Bhatia, president and CEO of Principal Asset Management. “Most people don’t have a good sense of what they really need, both to save and live off of.”
Retirement worries tend to be greatest among Americans closer to retirement. Nearly 70% of Gen X, ages 44 to 59, and 50% of baby boomers, those ages 60 to 78, said they don’t believe their savings are sufficient to pay for their retirement, the Principal survey found.
Working with a financial advisor can help you create a clear plan and take steps to get — and stay on — track.
In the Prudential survey, 93% of all respondents working with a financial advisor expressed confidence in covering essential retirement expenses, compared with 83% of those without an advisor. The confidence gap was wider when asked about covering nonessential expenses, at 86% to 68%.
Free online retirement calculators can also help you check whether your savings are on target. Those include options from government agencies such as the Social Security Administration and Department of Labor, as well as tools from financial firms such as Principal, Prudential and Vanguard, among others.
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