Inflation is draining retirement nest eggs as many Americans miss the looming threat

A new TIAA survey finds that 43% of Americans reduced retirement contributions in the past year, even as a Social Security benefit cut looms.

More than four in 10 Americans have cut back or paused retirement contributions over the past year to keep up with everyday expenses, even as a projected Social Security benefit reduction of about 22% approaches by 2032. Most respondents do not realize it is coming, according to a new TIAA survey.

The research, Stretched Thin: Where Americans Stand on Affordability, Retirement, and Social Security, was conducted by KRC Research among 1,000 U.S. adults ages 18 to 65.

The results point to a layered retirement crisis: rising living costs are pushing Americans to tap the savings they will need later, while the federal program they depend on most faces a coming shortfall that remains largely off the public radar.

For financial advisors, the findings are a clear prompt to start the conversations clients need most.

A blind spot around Social Security

Only about one in five Americans, or 20%, said they were very aware that Social Security's trust fund is projected to run short by 2032, according to the 2026 Social Security Trustees Report.

One in five respondents, or 21%, said the survey was the first time they had heard about the projected shortfall. Under the same report, if Congress does not act, beneficiaries would face an automatic across-the-board cut of roughly 22%.

The awareness gap is notable given how heavily Americans rely on the program. The TIAA survey found that 80% of respondents saw inflation and the rising cost of living as a direct threat to retirement plans, yet the reduction risk facing the program meant to support those plans remains largely unknown.

"The most consequential threat to Americans' retirement income is also one of the least understood," said Jim Johnson, Global Head of Government Relations and Public Policy at TIAA. "Every dollar pulled from retirement savings today is a dollar that's not invested and being multiplied for the future."

Separately, a June Social Security Confidence Survey by PlanGap found that 69% of Americans age 45 and older lack confidence that benefits will remain at current levels, reinforcing TIAA's findings and highlighting an opportunity for advisors to lead more structured planning conversations.

As InvestmentNews has reported, helping clients prepare for possible benefit cuts now requires both analytical rigor and emotional intelligence.

Savings are under strain

The pressure of daily finances is changing behavior in measurable ways. According to the TIAA survey, 43% of respondents either reduced contributions (24%) or stopped them entirely (19%) over the past year in order to pay for basic living costs.

Only 7% were able to increase contributions during the same period. Another 12% said they withdrew money directly from retirement accounts to cover everyday spending.

The survey also found that 54% of respondents identified the cost of living as the biggest systemic barrier to participating in the retirement system, ahead of the complexity of the financial system (29%) and lack of access to employer plans (30%).

These changes can compound over time, leaving Americans more dependent on Social Security just as the program faces one of its most serious structural challenges in decades. As InvestmentNews has reported, retirement uncertainty is rising across age groups, with those closest to retirement feeling the greatest strain.

What advisors and plan sponsors can do

Even under pressure, Americans are not standing still. When asked about the possible Social Security shortfall, 21% said they plan to rely more on personal savings and less on the program, 19% want to raise contributions to employer-sponsored plans, and 19% plan to open or add more to an individual retirement account. Fifteen percent said they are actively looking for guaranteed lifetime income products, such as annuities, to fill in gaps Social Security may not cover.

That signal is especially meaningful, according to TIAA's Jim Mullery, head of institutional relationship management.

"Plan sponsors should respond by making lifetime income a default feature of retirement plans," Mullery said. "Not just an accumulation vehicle, but an engine for generating income that lasts a lifetime."

The advisor's role in bridging this gap is hard to overstate. When clients do not understand the Social Security shortfall, cannot measure the impact of paused contributions, and are dealing with real financial pressure, the planning conversation becomes even more urgent.

Data from a 2025 protected income study found that two-thirds of advisors had changed their retirement planning approach over the past year, with greater focus on annuities and protected income strategies as confidence in Social Security weakens.

The TIAA survey also found that 90% of respondents agreed that every American should have access to retirement savings and the tools to manage them, a rare point of consensus that Johnson said Congress should not ignore.

"In an era of sharp division, retirement security is a rare area of common ground," Johnson said, "and Congress should treat it that way."

For advisors working with clients, the TIAA data offers a practical takeaway: the Social Security cliff is years away, the erosion of savings is happening now, and the window to narrow the gap through guaranteed income, disciplined contributions, and legislative action is getting smaller.

InvestmentNews continues to track how advisors are rethinking income strategies in response to this combination of pressures.