How has COVID affected retirement readiness?
There appears to be a disconnect between people’s retirement plans and what actually occurs, as 70% of non-retirees say they expect to work at least part-time in retirement, up from 65% in 2020. In reality, a scant 6% of retirees are working, virtually on par with the 7% of retirees who were working last year.
Sixty-nine percent of Americans say they believe the COVID-19 pandemic will have a greater overall impact on them than the Great Recession. This jumps to 86% among retirees.
Forty-three percent say they are unable to save anything for retirement right now, up from 37% in 2020. Forty-two percent say they are too far behind on their retirement goals to catch up, up from 31% in 2020. Forty-nine percent say they are just trying to get by day-to-day and cannot even think of saving for retirement, and 56% say stock market swings are making them nervous about their retirement savings.
Americans are responding with much more fear about their finances following the outbreak of the pandemic than they did during the Great Recession, with 61% now saying they are nervous about their day-to-day finances, compared with 39% following the Great Recession. They are also more nervous about their retirement savings (66% versus 34%), their professional career (58% versus 42%), saving and spending money (61% versus 39%) and managing market risk when saving for retirement (60% versus 40%).
The full story of this pandemic won’t be known for some time but it’s clear that 401(k) participants are worried about their future financial security. It’s crucial that employers use this opportunity to consider any new risks that could affect their 401(k) plan and develop strategies to help mitigate those risks and future unexpected events.