Americans are postponing their lives due to economic uncertainty

The state of the economy isn't just costing Americans money. It's putting their lives on hold. 

New research shows that Americans of all ages are postponing major life events due to economic uncertainty. It's not just that older workers are putting off retirement, as earlier studies have shown. Now large numbers of younger workers are delaying the milestones of adulthood, such as buying a home, getting married and having children.

"Clients are postponing major life events … not by choice, but as a result of the economic environment," said Noah Damsky, the co-founder of Marina Wealth Advisors in Los Angeles. "Inflation has soared while wage growth has lagged. Folks simply don't have the funds for an expensive wedding or a large down payment."

A new study by the insurance giant Northwestern Mutual found that millennials and Generation Z were particularly prone to this procrastination. Almost a quarter — 23% — of Gen Z'ers and 18% of millennials said they'd put off purchasing or building a home.

Family building was put on the back burner as well. Thirteen percent of Gen Z and 9% of millennials said they would postponed getting married. Nine percent and 8% of Gen Z and Y, respectively, delayed having or adopting children.

Careers are also on hold. Among Generation Z respondents, 29% said they were putting off changing jobs or searching for a new one, and 22% said they were holding back from starting their own business. For millennials, 19% were delaying their job search and 15% were deferring their dreams of a new business.

All of this holding back is closely linked to economic concerns. Northwestern found that a large majority of Americans — 67% — expected a recession to arrive this year, and 54% expected inflation to increase. In response, Americans are cutting back — 41% said they were postponing large expenses until the economy lands on more solid ground.

"Worries about recession are quickly rising from nil to real," Christian Mitchell, the chief customer officer at Northwestern, said in a statement. "For Gen Z in particular, that means learning how to prepare for the long term and the risk of the first sustained economic downturn in their young professional lives."

These worries are not without merit. The past year and a half have been an unusually difficult period for the U.S. economy, with both historic inflation and stock volatility wrecking Americans' finances. In 2022, the S&P 500, Nasdaq and Dow Jones all suffered their worst years since 2008, with the S&P down 19.4%. 

At the same time, both inflation and interest rates have soared, making everyday purchases, credit card debt and mortgages more costly. In the first half of 2022, the yearly increase in the consumer price index jumped to 9.1%, its highest point in four decades. To bring that down, the Federal Reserve has raised the federal funds rate to more than 5% — the highest it's been since 2007.

For many older workers, all of this means delaying another milestone: retirement. For years, research has shown that Americans are retiring later and later in life. A Gallup study, for example, found that from 1991 to 2022, the average U.S. retirement age rose by four years, from 57 to 61.

Now a new survey of American workers by the Employee Benefit Research Institute, a non-profit research firm in Washington, D.C., has shown how particularly difficult it is to retire in 2023. Retirement confidence — workers' optimism that they'll be able to live comfortably through their post-work years — plunged this year, from 73% in 2022 to 64% in 2023. EBRI said this was the steepest drop in retirement confidence since 2008.

In explaining their lack of optimism, these respondents cited familiar concerns. Eighty percent said they worried the economy would enter a recession within the year, and 86% expected inflation to remain high over the next 12 months.

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"Delaying retirement is undoubtedly the top discussion for people in the retirement red zone," said Ashley Folkes, the director of wealth planning at American Heritage Financial in Birmingham, Alabama, using a common term for the final years before retirement. "Their success rate of hitting all their goals has fallen. There are only a few things you can do to increase the success rate: delay retirement, live off less, or work part-time in retirement."

Taken together with Northwestern's research, the two studies show that many Americans are waiting for the economic storm to pass before they begin the next phase of their lives. But as some wealth managers have pointed out, a person can only postpone life — no one can extend it.

"Most people have a strong view on what they consider their prime years for specific life events, so even a few years difference can mean a lot," said Jeremy Bohne, the founder of Paceline Wealth Management in Boston. "That's why it's important to identify what might cause your financial plan to no longer be viable, and to take steps to prevent that from happening."