BMO Real Financial Progress Index: Inflation Causing a Quarter of Americans to Delay Retirement

CHICAGO, May 31, 2022 /PRNewswire/ – This quarter's BMO Real Financial Progress Index results found that inflation and rising consumer costs are severely affecting Americans. Nearly 60% of those surveyed said that inflation has adversely affected their personal finances, of which about one in four said that they have felt a major impact. As a result of inflation, 36% of Americans have reduced their savings and 21% have reduced their retirement savings. A quarter of Americans will need to delay their retirement. Younger Americans are feeling the most impact – over 60% of those aged 18-34 said they had to reduce contributions to their savings.

These findings are from the latest BMO Real Financial Progress Index, a quarterly survey conducted by BMO and Ipsos that measures Americans' sentiment around financial confidence. The survey was conducted from March 30 to April 25, 2022.

80% of Americans surveyed plan to change their actions to offset the impact of inflation and rising costs of everyday essentials:

• 42% are changing how they shop for groceries. This includes opting for cheaper items, avoiding brand names and buying only the essentials.
• 46% are either dining out less or consciously spending less when dining out.
• 31% are driving less to offset the soaring cost of gas.
• 23% are spending less on vacations or canceling them altogether.
• 22% are taking measures such as canceling subscriptions to the gym, cable, etc.

Nearly half of women plan to adjust the way they shop for groceries (47% vs. 36% men), dine out less (49% vs. 43% for men), and 25% of women plan to cancel subscriptions vs. 20% of men.

“Prices across the board – from cars and gasoline to groceries and other everyday essentials – are rising at the fastest pace since the 1980s. Consumers must think differently about their finances in this inflationary environment,” said Paul Dilda, head of consumer strategy for BMO Harris Bank. “Seek advice from a financial expert on ways to successfully manage your personal finances, from learning ways to save and which types of accounts to use, to moving from knowing what you should do with your money, to actually doing it. By learning about what do to differently, and what not to change, during a period of inflation, consumers can maintain momentum toward their financial goals.”

Americans understand that planning and budgeting can help them better manage their finances and plan for increased costs. Compared to Q1 of 2022, the survey results show an increase in the percentage of Americans setting yearly budgets (39% vs. 42%), having a written financial plan (33% to 37%) and meeting their financial advisors on a monthly basis (15% to 22%).

When asked who is most important in helping reach financial goals, 55% said their bankers were crucial (up 5 points from last quarter) and 52% said their investment company financial advisors were important (up 6 points from last quarter).

Overall, the survey showed a slight increase in confidence levels from the last quarter (75% to 78%) which could be attributed to more and more Americans taking control of their personal finances, having a written financial plan, and checking in more often with their financial advisor.

• Review and adjust your budget to account for the rising cost of every day items.
• Assess your ongoing expenses such as streaming services, cable subscriptions, gym memberships or cell phone plans to negotiate lower prices or see if any of these can be reduced or eliminated.
• Postpone big-ticket purchases. Some price increases may be temporary, in which case it may be worthwhile to wait.
• Review monthly payments, such as the homeowners' or auto insurance, to ensure it is appropriate and you are getting the most for your money.
• Speak with an expert to help ensure your savings and spending goals are still on track. If not, make adjustments.

To find out how BMO can help customers make financial progress, visit: https://www.bmoharris.com/main/personal

Launched in February 2021, the BMO Real Financial Progress Index is an indicator of how consumers feel about their personal finances and whether they are making financial progress. The index aims to spark dialogue that will help consumers reach their financial goals and to humanize a topic that causes anxiety for many – money.

The research detailed in this document was conducted by Ipsos in the United States from March 30-April 25, 2022. A sample of n=3,407 U.S. adults ages 18+ were collected. Quotas and weighting were used to ensure the sample's composition reflects that of the U.S. population according to census parameters.

For more information on how BMO's products and services can help consumers make real financial progress, visit www.BMOHarris.com.

BMO Harris Bank provides a broad range of personal banking products and solutions through more than 500 branches and fee-free access to over 40,000 ATMs across the United States. BMO Harris Bank's commercial banking team provides a combination of sector expertise, local knowledge and mid-market focus throughout the United States. For more information about BMO Harris Bank, visit the company fact sheet. Accounts are subject to approval. BMO Harris Bank N.A. Member FDIC. BMO Harris Bank is part of BMO Financial Group, a highly diversified financial services provider with total assets of CDN$1.04 trillion as of April 30, 2022.  

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SOURCE BMO Harris Bank