Americans Pessimistic About Personal Finances: Allianz Life Survey

Looking ahead to the new year, many Americans are feeling downbeat about their personal financial situations, according to a new study from Allianz Life Insurance Co. of North America.

Twenty-nine percent of participants in the survey said their financial situation is worse now than it was a year ago, up from 19% in 2021. Respondents who said their financial situation is better than a year ago slightly decreased to 19% from 22%.

Fifty-three percent of those surveyed considered their financial picture the same as last year, down from 58% in 2021.

"This has been a tough year for Americans with inflation creating havoc with their finances," Kelly LaVigne, vice president of consumer insights at Allianz Life, said in a statement. "These challenges aren't going to go away when we flip the calendar, so it is best to make a plan for mitigating ongoing risks to financial stability like inflation and market volatility in the year ahead."

Allianz Life conducted an online survey in November among a nationally representative sample of 1,000 respondents.

Inflation's Toll

Last year, survey participants cited the pandemic as their top concern. This year, it's inflation, which is at 40-year highs. Fifty-two percent of respondents said rising inflation is the first or second most worrisome threat in the next year, up from 38% in 2021.

Thirty-six percent pointed to price increases are the biggest threat to their retirement savings and retirement plans in the coming year, up from 25% who said this in 2021 and 8% in 2020. About half of Americans reported that their financial stress was about the same this year as it was in 2021, but 35% said they had experienced more stress during the past year, including 41% of Gen Xers, 36% of millennials and 27% of baby boomers.

Eighteen percent of respondents said that with a recession looming, they anticipate things getting worse in 2023, up from 12% last year who said this about 2022.

The survey found millennials more optimistic for 2023, with 44% expecting their financial situation to improve, compared with 25% of Gen Xers and 16% of boomers. Gen Xers were more likely than either boomers or millennials to say their financial situation had worsened over the last year.

Resolving to Write a Financial Plan

On a brighter note, fewer participants in this year's survey said they have fallen into bad habits this year. Spending too much, for instance, is trending downward, from 32% who owned up to this in 2020, to 28% in 2021 and to 26% this year.

Still, 17% admitted that their worst financial habit is spending more than they make, and 15% said they have no household budget.

Despite worries around their finances this, more respondents said they expect to make and keep New Year's resolutions to manage money better and save more. Thirty-two percent ranked financial stability as their top focus area for next year, up from 23% in 2020.

Eighteen percent of participants included financial planning as a New Year's resolution for 2023. Allianz Life noted that this is up from recent years, but not as high as post-recession years 2009 and 2010, when 33% said they would include financial planning in their resolutions.

Here are the top ways respondents said they want to improve their finances:

Build up an emergency fund: 21%
Pay down credit cards: 17%
Increase retirement savings: 14%
Make a budget: 12%

"Everyone should have a written financial plan," LaVigne said. "This is especially true for anyone who wants to reduce their financial stress and feel more in control of their money. It helps to have a documented strategy for your money — particularly one developed with the help of a financial professional — to review when you're feeling financially overwhelmed."

The survey found that 33% of Americans are more likely to seek out the advice from a financial professional in 2023, compared with 22% in 2021.

Fifty-three percent of respondents said they are likely to start or continue to search for a new job in 2023. Forty-two percent of job-searchers said salary or low pay for their skillset is the main reason. Twenty-six percent cited lack of opportunity to advance their career in their current job, 25% blamed lack of flexibility to work when or where they want, and 25% cited toxic company culture or workplace.