Volatility will continue to hammer markets in 2023 and people are fretting over retirement savings. Here are 3 big takeaways from Allianz's latest markets survey.

• Americans are increasingly anxious about their financial futures as they worry about market volatility, inflation, and a recession.
• 64% of survey respondents to an Allianz survey would rather hold cash rather ride out market swings.

Most Americans are nervous about their retirement portfolios in the face of a potential recession and as inflation still rages hot, and they'd rather hold onto cash than risk losing money in stocks, according to a survey from Allianz Life.

With Americans concerned about their financial futures, many are halting retirement contributions and are worried about covering their day-to-day expenses, the financial services provider said Tuesday about findings in its Quarterly Market Perceptions Study for the fourth quarter of 2022.

77% of the survey's respondents believe equities will be volatile in 2023, extending the big swings that eventually drove stocks into a bear market in 2022. Stocks were hit hard largely as multi-high year inflation prompted the Federal Reserve to swiftly kick up borrowing rates from zero percent.

Here are three big takeaways from the online survey conducted in December. It has a nationally representative sample of 1,005 respondents who were 18 years of age or older.

1. Fretting over (401)k plans

If market volatility runs hot through 2023, 65% of respondents said they will adjust their retirement and investment plans, rising from 57% during the same period last year.

Meanwhile, 40% of Americans worry that market volatility will spur their employers to suspend matching contributions to their 401(k) accounts. Tens of millions of American workers have employer-sponsored retirement plans, and 80% of 401(k) participants make less than $100,000 per year, according to the nonprofit American Retirement Association.

2. Cash is king

Cash is attractive to Americans on the prospect that market volatility will persist.

Allianz Life said 64% of survey respondents said they would rather have their money sit in cash rather than endure market swings. Only 19% participating in the survey said they're ready to invest now and are comfortable with current market conditions. That rate is down from 29% a year ago and from 26% in the third quarter of 2022.

It's understandable at the start of the new year that people are worried about market risks, Kelly LaVigne, vice president of consumer insights at Allianz Life, said in the report.

However, "[this] money, while subject to potential market drops, will also miss out on gains when the market recovers," he said.

3. Stressing over bills

While US headline inflation has eased from the peak of 9% in mid-2022, consumer prices are still elevated. The headline CPI rate cooled to 6.5% in December but core prices, excluding energy and food, rose as shelter costs increased.

Allianz Life found 82% of Americans are worried that rising inflation will keep hurting their income's purchasing power in the next six months. Inflation concerns have drawn 55% of respondents into either stopping or reducing their retirement savings, and 45% have dipped into retirement money.

At the same time, 67% said they are more concerned about paying bills than saving up for retirement.

"Reducing retirement savings should be a last resort, short-term answer for inflation because it could have a significant detrimental effect on financial security for years to come," said LaVigne.

The S&P 500 since the start of 2023 has gained nearly 5% after tumbling 19% last year. Meanwhile, the market's so-called fear gauge has drifted lower. The Cboe Volatility Index, a widely watched track of the 30-day implied volatility of the S&P 500 index, has declined 12% so far this year.