The missing link to retirement security
Episode publishedPodcast: Goldman Sachs ExchangesGoldman Sachs Exchanges
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The US economy has been remarkably resilient. Inflation is falling, unemployment remains low, and markets are rising. So is this environment putting Americans on track to meet their retirement goals, or are they still falling short?
When we think about the current economic environment, the current market environment, there's some good news in there, but there are also some challenges as well, both for current workers as well as retirees.
I'm Alison Nathan, and this is Goldman Sachs Exchanges. For today's episode, I'm speaking with Mike Moran, a pension strategist in Goldman Sachs' asset management business, to discuss how the current macro environment is changing the retirement picture for both savers and retirees. Mike and his team are out with a new report that describes what they see as a missing link to retirement security. Mike, welcome back to the program. Thanks for
having me, Alison.
Mike, as I just mentioned, inflation is moderating. The Fed recently cut interest rates for the first time since embarking on an extended period of raising rates, and it was an aggressive cut at that, 50 basis points. What does this mean for retirement savers?
So I think, Allison, when we look at the current economic environment, the current financial market environment, it's a bit of a mixed bag. So inflation is coming down. But when we look at the cumulative effect of inflation over the last couple of years, we see it having an impact on individuals, and that's impeding at times their ability to save for retirement. So in our retirement survey, we asked working respondents, what was the biggest change in your personal financial situation over the past year? And the most popular answer was just an increase in everyday expenses. And so you're seeing
Right. Because even though inflation is coming down, obviously, price levels are still quite high. So we are hearing a lot about this affordability crisis in some respects in the US. There's a lot of debate, it seems to be, about whether that's actually bringing on a retirement crisis. What's your view of that, and what does the survey reveal about that? So
I think, Allison, when we talk about the retirement system, we we can't talk about it as just one group of people. Right? There's a distribution. And I think what we find is that the current retirement system works well for some. It doesn't work as well for others. So there's some data from the survey of consumer finances that would say, those at the upper income level, the top quintile of income, when you look at their retirement balances, their savings balances, they've grown quite dramatically over the last several decades. Lower income levels, not so much. And I just wanna point out, I did
That's actually very striking. So when you say lower, that's anyone but the top 20%. Correct.
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