Many Feel Financially Ready, but Fewer Have Planned for Inflation
A growing number of Americans are entering retirement with optimism—but without fully accounting for the financial pressures ahead. A new global survey by Prudential found that while 89% of wealthy U.S. adults are confident they can cover essential costs in retirement, only 55% have factored inflation into their long-term plans.
Rising costs for housing, groceries, and health care continue to erode savings. This disconnect between perception and preparedness has led experts to call it a “confidence paradox.” As Caroline Feeney, Prudential’s global head of retirement and insurance, explained: “Feeling ready is very different than actually being ready.”
Feeney warned that overconfidence can prevent people from taking action early. “People feel prepared, so they’re not adjusting their savings or strategies now—potentially widening a retirement gap they don’t yet see,” she said.
Inflation and Social Security Create New Challenges
The timing of this confidence gap is striking. More than 11,200 Americans turn 65 every day, a trend that will continue through 2027, according to the Alliance for Lifetime Income. Yet as prices rise, retirees’ purchasing power is slipping. The Consumer Price Index (CPI) climbed 3% year-over-year in September, while the Social Security cost-of-living adjustment for 2026 will rise only 2.8%—an average boost of about $56 a month.
That increase may do little to offset higher living costs. Research from Goldman Sachs Asset Management shows retirees’ actual spending has outpaced inflation in recent years. Meanwhile, 63% of U.S. respondents in Prudential’s survey said they are concerned about the government’s ability to sustain Social Security benefits over time.
Generational Divide in Retirement Readiness
Financial planners say many Americans underestimate how much they will spend in retirement. “Most people assume they’ll cut expenses once they stop working,” said Uziel Gomez, a certified financial planner at Primeros Financial. “But what we actually see is that retirees often spend more because they finally have time to enjoy activities they postponed for years.”
A separate survey by Principal Financial Group found that 54% of Americans expect their financial situation to improve during their lifetime—but half still fear running out of savings. The anxiety is strongest among those nearing retirement: nearly 70% of Gen X respondents and 50% of baby boomers said they doubt their savings will be enough.
According to Kamal Bhatia, CEO of Principal Asset Management, “Most people don’t have a clear picture of what they’ll actually need. Half the population wants better tools to manage their retirement, while the other half needs motivation just to start saving seriously.”
Financial Planning and Professional Guidance Make a Difference
Working with a financial advisor can significantly boost retirement readiness. Prudential’s survey found that 93% of respondents who have an advisor felt confident about covering essential expenses, compared with 83% of those without one. The gap widened further when it came to nonessential spending—86% vs. 68%.
Experts recommend combining professional guidance with self-assessment tools such as free retirement calculators from the Social Security Administration, Department of Labor, or financial firms like Principal, Prudential, and Vanguard. These resources can help retirees test their savings assumptions against inflation, health costs, and life expectancy.
As the U.S. population reaches “peak 65,” the gap between confidence and preparation may widen unless households take concrete steps. Retirement, financial experts warn, is no longer about how much you think you have—it’s about how well you’ve planned for what’s coming.
