Millions of Americans expect their efforts to save for retirement to be derailed, perhaps permanently, by the coronavirus pandemic. That’s the main takeaway from several surveys released in October that begin to create a snapshot of the retirement landscape in the Covid era.
Workers who have been laid off or had their hours reduced amid the pandemic are particularly concerned about their future, according to the 2020 Wells Fargo Retirement Study, conducted by the Harris Poll. Among workers affected by the pandemic, 70% say they are worried about running out of money in retirement, 61% say they are much more afraid of life in retirement, and 61% say the pandemic took the joy out of looking forward to retirement.
“With individual investors now largely responsible for saving and funding their own retirement, disruptive events and economic downturns can have an outsized impact on their outlook,” said Nate Miles, head of retirement for Wells Fargo Asset Management.
The Wells Fargo poll involved online interviews with 2,660 workers whose employment wasn’t affected by the pandemic, 725 whose employment was negatively affected, 200 investors with at least $1 million in investable assets, and 1,005 retirees.
The survey suggests that many laid-off workers had to dip into their retirement savings. Working men reported median retirement savings of $120,000, double the figure for men who were adversely affected by the pandemic. For women, those figures were $60,000 and $21,000.
The economic downturn has reinforced the importance of Social Security to many Americans’ retirement plans, and made them more concerned about the program’s future, according to the survey. The poll found that 71% of workers, 81% of those negatively affected by Covid-19, and 85% of retirees say the pandemic increased their appreciation of Social Security. Meanwhile, 76% of workers are concerned Social Security will be raided to pay down government debt, and 72% are afraid that it won’t be available when they retire.
Retirement Savings Not a Priority
First National Bank of Omaha, in a separate survey on the pandemic’s financial impact, found that 54% of respondents say the pandemic has had a negative impact on their ability to save for retirement. The poll was conducted online using Survey Monkey and included 1,075 adults spanning across U.S. geographic regions and income levels.
When asked about their financial priority for the rest of 2020, only 6% of respondents said retirement savings, trailing paying off debt (35%), increasing their savings (31%), and increasing their emergency funds (14%).
“Retirement planning is essential, but our results show a shift is occurring, as Americans report an urgent need to pay off current debt and build their emergency fund,” said Sean Baker, First National Bank of Omaha’s executive vice president for the individual customer segment.
Savers Stressed Out, Survey Says
John Hancock Retirement’s seventh annual financial stress survey of retirement plan participants found a sharp rise in savers’ stress level. The share of workers saying they’re experiencing financial stress has climbed to 67% during the pandemic, up from 44% before Covid-19. The share reporting a high level of financial stress has grown to 27% from 11%, according to the survey.
The poll was conducted by Greenwald & Associates and involved an online survey of 589 John Hancock Retirement plan participants and 1,026 plan members in Canada.
Of the key stressors respondents cited when asked about their financial concerns, not having enough saved for retirement ranked second, behind concerns about the current state of the economy.
A Moment for Annuities?
According to a survey from Alliance for Lifetime Income, an annuities advocacy group, 49% of workers are concerned their retirement savings and income won’t last through retirement. Among households with annuities and pensions, however, the survey found that 78% expect their income to last throughout retirement, compared with 41% of households that lack “protected” income.
The third annual Protected Lifetime Income Study, based on interviews with 3,036 U.S. adults ages 25 to 74 in August, also found that the percentage of “protected” U.S. households – those with a pension or annuity to supplement Social Security benefits – increased for the first time. That figure grew to 40% this year from 37% in 2019, an increase of roughly 3.1 million households driven largely by annuity purchases, the study’s authors conclude.
“Our research shows the pandemic and resulting Market and economic conditions have triggered what we are calling a ‘retirement reset,’ forcing Americans to rethink their retirement plans and protect their retirement income,” said Jean Statler, chief executive of the Alliance for Lifetime Income.