Retirement savings and university? Not really. Americans are immediately focused on financial concerns.
Short-term financial stresses like paying off credit card debt and building emergency funds have taken precedence over long-term goals like retirement and retirement, according to new research from Fidelity Investments.
At Fidelity’s 14e In its annual Financial New Year’s Resolutions study, the company found that for the first time in the world, 53% of Americans are focusing on short-term savings goals rather than long-term goals. That means goals like saving for retirement and college take a back seat.
“My guess is that people are feeling price pressures, reading tea leaves about job security and headlines about the economy. For younger generations who haven’t experienced a market correction, it may seem more daunting,” said Meredith Stoddard, vice president of life event planning at Fidelity Investments.
“I hope people don’t turn the temporary hiatus on long-term savings into a permanent hiatus. It’s a matter of habits. If you’re used to having extra money in accessible savings accounts, it can be difficult to channel that money toward long-term goals. Be sure to go back and review your finances regularly—a cadence that works for you—and adjust. Check in periodically so the months don’t turn into years,” Stoddard said.
After a year full of market volatility, high inflation and rising interest rates, Americans will be more cautious and pragmatic in 2023 than in previous years, the study found. Fidelity found that more than a third of Americans say they are in a worse financial situation than last year, and only 65% think they will be better off next year. This compared to 72% in the last study.
More than half (58%) of those whose financial situation is worse than last year attribute it to inflation. 44% of those experiencing financial loss had to tap into an emergency fund.
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As the new year approaches, 66% of Americans are considering a financial resolution for 2023, Fidelity reports. A large majority (94%) of those planning a financial resolution say they have a different approach, and nearly half (45%) envision more conservative goals for the coming year.
Despite this new sentiment, the top resolutions remain consistent with past years: saving more money (39%), paying off debt (32%) and spending less money (28%).
“While the focus is now on more immediate needs, it’s our long-term goals and objectives that keep us going — and planning can help us,” said Stacey Watson, senior vice president of Life Events Planning at Fidelity Investments.
“Taking control of your finances is a great way to help you feel in control, even when external forces create challenges. If you can, saving more and paying down debt, even small amounts, can have a big impact on a household’s financial and emotional well-being,” Watson said.
Inflation remains a top concern, Fidelity said, with Americans’ top financial worries being the impact of inflation on their everyday spending and savings (43%), followed by economic uncertainty/recession (39%) and unexpected expenses (38%). .
When asked to describe their expectations for 2023, 29% described their outlook as “a year of reasonable life”.
“After the stress of the past few years, Americans are naturally taking a pragmatic view of their finances,” Watson said.
“This is an encouraging sign of the courage and resilience we can use when the financial situation gets tough. Given the ups and downs experienced, being creative and creating new financial wellness habits are positive signs, as many find ways to change direction, pay off debt, or build emergency savings. . Good planning and balance is key,” Watson said.