Americans’ feeling of financial insecurity is at a record

Americans’ feeling of financial insecurity is at a record, per Northwestern Mutual.

The 2024 Planning & Progress Study revealed a concerning trend in Americans' financial security, with 33% of adults reporting feeling financially insecure, up from 27% last year. This increase, driven by worries about inflation, marks the highest level of financial insecurity recorded in the study's history.

Despite these personal concerns, there's a shift in expectations about the broader economy, with 54% of adults now expecting the country to avoid a recession this year. This is a significant decrease from the 67% who predicted a recession last year.

However, among Gen Z adults, there's a different sentiment, with 62% believing the country will enter a recession this year, making them the highest percentage holding this view. This is despite a 12% decrease from 2023.

A new report has also raised questions about Gen Z's retirement savings, revealing that the median amount saved in retirement accounts for this group is just $33,000. It's important to note that not all Gen Zers have reached working age yet.

For clarification, Gen Zers are individuals born between 1997 and 2012, according to USA Today. Given that it's currently 2023, some Gen Zers are just shy of 21 years old, which is often considered the typical working age.

A study by the TransAmerica Center for Retirement Studies examined the average savings across different age groups, including Gen Z, Millennials (Gen Y), Gen X, and Baby Boomers. Another USA Today article outlined the age ranges for these groups and their respective average retirement savings:

• Gen Z (born 1997-2012) has a median of $33,000 in retirement savings.
• Millennials (born 1981-1996) have a median of $50,000.
• Gen X (born 1965-1980) have a median of $87,000.
• Baby Boomers (born 1946-1964) have a median of $162,000.

Despite being early in their careers, Gen Z workers are contributing a higher percentage of their income to retirement savings than recommended. On average, they're putting 20% of their annual salary into a 401(k) or similar plan, whereas experts suggest 10% to 15%.

Additionally, recent data shows that Gen Y and Gen Z were among the largest groups making personal luxury purchases in 2022, contributing to a 22% growth in global personal luxury goods sales. This increase in spending comes at a time when American personal savings have dropped to a 17-year low, and household debt continues to rise.

It's worth noting that luxury sales have remained strong despite rising interest rates, underscoring the resilience of this market segment.