‘Financial vortex’ threatens undersaved workers, Goldman says
Retirement savers are in better shape than last year. But they had better beware the worsening “financial vortex” that could suck them in.
According to the 2023 Retirement Survey and Insights Report released Tuesday by Goldman Sachs Asset Management, more U.S. workers have increased their savings over the last year, and more believe their retirement savings are on track. The study showed 65% of U.S. workers are confident in their ability to meet their retirement savings goals, up from 57% last year.
That’s the good news. More ominously, the report warned that a so-called financial vortex of competing responsibilities is threatening to derail the ability of workers to achieve their retirement goals. In fact, financial vortex challenges could reduce U.S. employee retirement savings by up to 37% over the coming years, the report said.
The leading factors threatening to sink respondents’ finances are credit card debt, saving for college, and caring for and financially supporting family members.
Life’s unexpected bumps can meaningfully derail the best retirement savings plans, especially when only 36% of workers have three months of income or more saved for emergencies, according to the study.
Those unseen bumps came fast and furiously in 2023 as working respondents reported higher incidents of caregiving, cash-outs, and financial hardships. The study showed 44% of respondents cashed out retirement savings at least once as they were changing jobs (up from 42%), 42% stopped saving for retirement as the result of a financial hardship (up from 33%), and 39% left the workforce to provide caregiving (up from 22%).
On the whole, 21% of those responding believe the financial vortex will delay their retirement by four or more years.
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