Allianz Life study finds inflation and financial worries weigh down American optimism for the year ahead

Key findings:

• 29% say their financial situation is worse now than a year ago
• 35% say they feel more financial stress than in 2021
• 41% of Gen Xers say they were more financially stressed in 2022 than 2021, compared to 36% of millennials and 27% of boomers

More Americans say their financial situation is worse than a year ago and don’t expect it to improve in 2023, according to the New Year’s Resolutions Study* from Allianz Life Insurance Company of North America (Allianz Life).

Nearly one in three Americans (29%) say their financial situation is worse now than a year ago. This is up from 19% of Americans in 2021. At the same time, respondents who say their financial situation is better than a year ago slightly decreased to 19% in 2022 from 22% in 2021. More than half (53%) say their financial picture is the same, down from 58% in 2021.

“This has been a tough year for Americans with inflation creating havoc with their finances,” said Kelly LaVigne, vice president of consumer insights, Allianz Life. “These challenges aren’t going to go away when we flip the calendar, so it is best to make a plan for mitigating ongoing risks to financial stability like inflation and market volatility in the year ahead.”

Inflation at 40-year highs is a major driver of this economic pessimism. The top worry in 2022 is the rising cost of living. More than half (52%) of respondents say rising inflation is the first or second most worrisome threat in the next year. This is up from 38% in 2021.

Inflation is also viewed the greatest risk to retirement plans. More than one in three (36%) say rising inflation is the greatest threat to retirement savings and retirement plans in the coming year, up from 25% in 2021, and 8% in 2020. While the COVID-19 pandemic was the top concern in 2021, those worries have subsided.

While about half (49%) of Americans say their financial stress was about the same in 2022 as in 2021, 35% say they felt more stressed in the past year. Gen Xers (41%) are more likely than millennials (36%) or boomers (27%) to feel more stressed financially in 2022.

Many Americans anticipate things will get worse in the coming year with a recession looming. In 2023, an increasing number say they expect their financial situation to get worse (currently 18% up from 12% last year).

Millennials are the most optimistic for 2023 with 44% expecting their financial situation to improve in 2023, compared to 25% of Gen Xers and 16% of boomers. Gen Xers (34%) are more likely than boomers (31%) or millennials (21%) to say their financial situation worsened over the last year.

Resolutions for 2023

One bright spot is that fewer Americans say they have bad financial habits this year. Americans who say they spend too much is trending down (currently 26%; compared with 28% in 2021 and 32% in 2020). Still, 17% say their worst financial habit is spending more than they make and 15% say they have no household budget.

Despite the added worry around finances in 2022, this may be motivating more people expect to make and keep New Year’s resolutions to manage money better and save more. Nearly one-third (32%) rank financial stability as their top focus area for next year, up from 23% in 2020.

The percentage of Americans who are including financial planning as a resolution increased to 18%. This is up from recent years but not as high as coming out of the Great Recession when 33% said they would include financial planning in their resolutions in both 2009 and 2010.

The top ways people want to improve their finances include:

• Build up an emergency fund, 21%
• Pay down credit cards, 17%
• Increase retirement savings, 14%
• Make a budget, 12%

“Everyone should have a written financial plan,” said LaVigne. “This is especially true for anyone who wants to reduce their financial stress and feel more in control of their money. It helps to have a documented strategy for your money – particularly one developed with the help of a financial professional – to review when you’re feeling financially overwhelmed.”

In addition, more people say they are willing to seek out advice from a financial professional in the coming year. One in three (33%) Americans say they are more likely to seek out the advice of a financial professional in 2023, compared with just 22% in 2021.

Many Americans anticipate a job change to alter their finances in the coming year. More than half (53%) of Americans say they are likely to start or continue searching for a new job in 2023. Among those who are likely to search for a new job in 2023, 42% say salary or low pay for their skillset would be the top reason. This was followed by lack of opportunity to advance career (26%), lack of flexibility to work when or where desired (25%), and toxic company culture or workplace (25%).

*Allianz Life conducted an online survey, the 2022 New Year’s Resolutions Study, in November 2022 with a nationally representative sample of 1,000 respondents.

About Allianz Life Insurance Company of North America

Allianz Life Insurance Company of North America, one of the FORTUNE 100 Best Companies to Work For® and one of the Ethisphere World’s Most Ethical Companies®, has been keeping its promises since 1896 by helping Americans achieve their retirement income and protection goals with a variety of annuity and life insurance products. In 2021, Allianz Life provided additional value to its policyholders via distributions of more than $10.6 billion. As a leading provider of fixed index annuities, registered index-linked annuities and fixed index universal life insurance, Allianz Life is part of Allianz SE, a global leader in the financial services industry with approximately 150,000 employees in more than 70 countries. Allianz Life is a proud sponsor of Allianz Field® in St. Paul, Minnesota, home of Major League Soccer’s Minnesota United.

This article is for informational and educational purposes only. It should not be used to make a buying decision. If you would like to speak with a financial professional, please use Annuity Alliance’s contact form.