Another victim of high inflation is emergency savings.

According to New York Life Insurance Company research, around one third of adult Americans are making less contribution to their emergency fund to help them pay for their daily expenses. According to New York Life Insurance Company, the average monthly reduction in emergency account contributions is $243. Millennials make the largest cut at $289.

“While it is concerning that the increased costs of everyday goods and regular expenses may deflate a necessary financial cushion, this environment means households are making calculated decisions about how to adjust their financial strategy in the way that makes the most sense for them,” said Dylan Huang, head of Retirement & Wealth Management Solutions for New York Life.

Inflation runs at 8.3% year-over-yearThe most recent U.S. Bureau of Labor Statistics measurement shows that it was 8.5%. Although that’s down slightly from the March peak of 8.5%, it is still the fastest annual pace in about four decades and far above the Federal Reserve’s target of 2%. 

The Fed already has raised a key interest rate two times this year in an effort to slow the pace of inflation and is expected to continue notching hikes this year. It is believed that as borrowing costs rise, so consumers will reduce their spending. This will result in a slower pace of price growth.

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According to New York Life research, inflation is also causing household to put off some of their financial goals, including vacations (33%) or paying down credit card debt (22%), purchasing a vehicle (22%) or buying a house (16%).

However, this is affecting long-term savings less than expected: 72% of respondents said they expect to still retire at their preferred age.

Huang stated that “Among those who are not yet retired we see this group making adjustments to their financial strategy while not allowing their short-term anxiety derail their retirement plans.”