Bruce Helmer and Peg Webb

As we enter the final stage of election season, the economy is a top issue for Americans. Voters consistently list rising prices for energy, food, and housing as among their top concerns.

As a result, for many Americans retirement can feel like it’s a lifetime away. To understand what’s driving this pessimism, Wealth Enhancement Group recently conducted a Retirement Lifestyle Survey in partnership with Wakefield Research, a leading consumer research firm.* One of the survey’s top takeaways is that people perceive that inflation will delay their retirement goals by 8+ years, on average.

For the more than half (55%) of survey respondents who have not retired, inflation fears have set back their retirement goals. In addition, despite 48% of respondents saying that they are doing “everything right,” 80% fear retirement is out of reach. Furthermore, 79% of working Americans believe they would need a financial windfall to be able to retire comfortably (with 23% of that number saying it would need to be a “massive” one).

Inflation remains a top concern, despite the data

“Persistent inflation” (at 39% in the survey) and “rising costs” (37%) were cited by respondents as top reasons they doubt they’ll have enough savings to retire comfortably. The fact is, inflation as measured by the Consumer Price Index eased to new three-year lows in August, climbing to 2.5% according to the U.S. Department of Labor. This is very close to the Fed’s long-term target of 2%. This means prices are still rising, just at a slower pace.

The problem for most people is that perceptions of food and energy prices (the most volatile components in consumer prices) have remained high along with shelter inflation (that is, rent or housing costs). This has been the case even as the U.S. economy has cooled following the pandemic when employers struggled to hire enough workers to reopen their businesses.

Consequently, it doesn’t feel like prices have budged for most people, even if the technical measures of inflation have come down a lot. Core inflation, a measure that excludes food and energy costs, held steady at 3.2% in August. Because these year-over-year increases compound earlier inflation, which was much higher, household budgets have been stretched and contribute to the strain that many Americans are feeling.

Structural reasons are contributing to persistently higher prices for food, energy, and housing that may also be eroding investors’ confidence in their ability to retire on time.

• Food costs: Even as cost increases for food slowed in August, prices have not dropped enough to change shoppers’ feelings about food costs. Part of the problem is that there’s little to no competition across the entire food supply chain. According to Farm Action, a nonprofit that researches corporate concentrations in agribusiness, just four companies control most of the nation’s food industries, including cottonseed used in cooking oils and as a feed supplement, beef processing, corn seed, and soybean crushing.

• Energy prices and transportation costs: The prices of used vehicles and energy were cheaper in August than they were in July, according to Labor Department data. An intensifying selloff in oil markets suggests that prices that consumers pay at the pump may decline in the next month or two. A gallon of gas cost an average $3.39 in August, down nearly 12% from a year earlier, according to the Energy Information Administration. Gas prices slid still further in September, with national prices averaging $3.25 a gallon as of Sept. 11, according to AAA.

As the economy has cooled, and commuting patterns have shifted, Americans are using less gas. But we also need to remember that, in 2019 (the latest available reliable data), more than two-thirds of energy was produced by six global corporations, according to Global Witness, an environmental advocacy nonprofit. With such a concentration of ownership, many observers are calling out price coordination as an inflation threat.

• Rents and mortgage rates could be easing: Many analysts think that housing inflation could follow the trajectory of general consumer prices, as renters sign new leases and policymakers contemplate cutting regulations that have constricted supply. Many multifamily homebuilders slowed their activity following the 2008-09 global financial crisis, and the problem has been made worse by restrictive local zoning rules and higher interest rates.

For consumers to see meaningful reductions in food, energy, and housing costs, more competition is needed and, in our view, should be encouraged at the policy level. But investors also need to remember that inflation is nothing we can directly control.

Long-term planning is essential

The best way to manage inflation and keep pace with rising costs is to have a long-term financial plan and to make sure your investment portfolio is appropriately diversified and includes asset classes that can outpace inflation, such as common stocks, commodities, inflation-protected securities, and so on. In addition, where possible, investors who are concerned about a retirement funding shortfall need to either (1) save more, (2) cut personal spending, (3) plan to work longer, or (4) add to their income through a side hustle.

There are two additional survey takeaways that bear mentioning: The first is the nearly 80% of respondents who said they would need a financial windfall to be able to retire comfortably. In our view, American expectations for a windfall need a serious reality check. A 2023 article reported that a little more than 1 in 5 Americans (20%) had received an inheritance at some point in their lives, as of 2022. The average American’s inheritance was $58,000 (including that 80% who inherited $0), and for the lucky few who inherited more than $0, the average was $266,000. So most of us should not expect a massive windfall to fuel our retirement plan.

The other point from the survey, and one of its few silver linings, is that most people are taking concrete steps to plan for their retirement. These activities include setting aside more money each month (32%), keeping a detailed budget (29%), creating an emergency plan (28%), and setting aside money to devote to travel and other experiences (25%). However, most investors may be shortchanging their long-term security by going it alone, as just 19% of respondents regularly meet with a financial adviser to discuss their retirement plan. A longstanding research study from mutual fund firm Vanguard confirms that financial advisers can add value, depending on a client’s circumstances.

Areas where advisers may add the most value include (among others) setting suitable asset allocation targets, implementing cost-effective strategies (at lower expense ratios), rebalancing portfolios, and helping investors remain disciplined when markets become volatile.

Related Articles

Your Money: Financial planning for special needs families

Your Money: How to protect yourself from cyberattacks

Your Money: Plan now for tax-law changes in 2026

Your Money: All this paperwork! What to keep, organize, trash and shred

Your Money: How to become financially independent

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

* The Wealth Enhancement study was conducted by Wakefield Research among 1,000 nationally representative U.S. adults ages 18+, in July 2024, using an email invitation and an online survey. Data has been weighted to ensure an accurate representation of nationally representative U.S. adults ages 18+.

Bruce Helmer and Peg Webb are financial advisers at Wealth Enhancement Group and co-hosts of “Your Money” on WCCO 830 AM on Sunday mornings. Email Bruce and Peg at yourmoney@wealthenhancement.com. Securities offered through LPL Financial, member FINRA/SIPC. Advisory services offered through Wealth Enhancement Advisory Services, LLC, a registered investment advisor. Wealth Enhancement Group and Wealth Enhancement Advisory Services are separate entities from LPL Financial.