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Americans Optimistic About 2022, Despite Inflation Concerns: Fidelity

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What You Need to Know

  • Fidelity said that 68% of respondents are making financial resolutions for the new year.
  • This year, 34% said they are in better financial shape, up from 29% in 2020.
  • Many study participants said they make financial resolutions to achieve greater peace of mind and live a debt-free life.

Americans appear to be somewhat more hopeful about the upcoming year, according to Fidelity Investments’ 2022 New Year’s Financial Resolutions Study

Sixty-two percent of study participants said they feel optimistic about the future, despite the unknown, and 72% expressed confidence that they will be in a better financial position in 2022. This number rose to 81% among those in the 18-to-35 age group. 

Fidelity said that perhaps as a result, 68% of respondents are making financial resolutions for the new year. 

At the same time, most people have not forgotten what the country has been through and are looking at their financial expectations practically, with concerns about inflation and rising costs weighing heavily on the minds of many. 

The study found that Americans across the board are also making resolutions around physical and mental health objectives at higher levels than in the past year. 

Fidelity said this may be the result of achieving success in 2021 with goal-setting. Seventy-one percent of respondents reported that they stuck with their 2021 financial resolutions, up from 58% in 2020. 

The study consisted of 3,031 adults aged 18 and older, split almost evenly between men and women, with an average age of 48 and an average annual income of $65,000. Slightly more than one-fifth were retired.

“This study confirms that actions taken at the start of the pandemic — such as budgeting better and replenishing that emergency savings fund — are becoming permanent habits for many,” Stacey Watson, senior vice president of life event planning at Fidelity Investments, said in a statement. 

“Americans are connecting their new perspective on well-being to the way they approach their finances, and as a result, becoming more thoughtful about saving and spending.” 

Ironically, some of this financial success may be attributable to the pandemic, Fidelity said. In fact, respondents discovered several surprising silver linings these past two years: 

  • “Becoming more thoughtful about saving and spending,” 42%
  • “Becoming closer to family,” 39%
  • “Becoming stronger as a person,” 34%

Fidelity said this aligns with what the firm has observed among its clients: 1.6 million households engaged in planning interactions with Fidelity in the 2021 second quarter alone, a 24% increase over the same period in 2020. 

This thoughtful approach to finances is carrying through in the new year, with a more practical view toward financial resolutions: 38% of respondents overall and 46% of the younger group are considering more conservative goals. 

The study was based on a national online CARAVAN Survey conducted in mid-October among 3,031 adults.

Many Americans Prioritize Themselves

The study found cautious optimism the prevailing sentiment among respondents, with 32% characterizing 2022 as a year of hope. This sentiment is echoed in how many families feel about their financial stability. 

This year, 34% said they are in better financial shape — up from 29% — compared with 24% in worse shape — down from 29%. Those in better shape said the main reasons for their success were things within their control: saving more, budgeting better and working more hours. 

For those resolved to save more in 2022, the objectives are split: 51% plan to save for the long term, while 49% are looking at shorter-term objectives, such as boosting emergency savings or saving for a mortgage. 

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Among the young cohort, 62% plan to increase their retirement contribution in the year ahead, compared with only 34% of older Americans. 

And after paying off bills and setting aside money for the future, Americans mainly want to spend their extra dollars on travel — if it’s safe to do so. 

Inflation Tops 2022 Concerns 

Among study participants who said they were in worse financial shape in 2021, 43% cited inflation as the main reason, up from 27% in 2020. It is also the top concern for 2022. 

If a financial setback does occur, sensible solutions are holding sway, according to the survey. 

Rather than raid their retirement account or take out loans, 54% of Americans said their top solution would be to cut back on other expenses, while 39% said they would dip into their emergency savings. Fidelity said this is consistent with what it is seeing in retirement accounts, with a steady decline in savers taking out 401(k) and 403(b) loans. 

Compared with last year, however, the study suggests stress levels have significantly decreased in 2021. When stress is present, it involves finding money to save after paying monthly bills, the ability to simply pay bills and saving for retirement. 

Fidelity suggested that part of this stress reduction may be attributed to acceptance, as 84% of respondents said that after living through the pandemic, they have learned to stop worrying about things they cannot control. 

What people can control, however, is their work situation. Nearly 39% of currently employed respondents said they were likely to look for a new job in 2022.

In the 18-to-35 age group, 47% of those who are employed said they were looking to change jobs in the year ahead. Aside from money, their top reasons for seeking a change are stress levels, flexibility and “finding a job that better aligns with my personal values.” 

Good for Financial Health 

Many study participants said they made financial resolutions to achieve greater peace of mind and live a debt-free life. But the research suggests that the simple act of making a resolution may actually have a transformative effect, Fidelity said. 

The goal of resolutions is to keep good financial routines going strong well beyond January and have them become lifelong habits. 

Based on suggestions from those successful in keeping resolutions in 2021, the key to success is the good feeling of making progress and setting clear and specific financial goals. Further, 86% of all respondents said having a plan in place can help them better deal with the unexpected. 

For those who work with a financial professional, it can be helpful to set clear and specific financial goals with that person, to help set realistic milestones to achieve those goals — and ultimately, secure greater peace of mind. 

“It’s amazing that taking the one relatively simple step of setting a goal can help you feel better about the direction you are headed, but this has been proven to be the case time and again,” Watson said.

(Photo: Shutterstock.com)