Many Americans forced to change their plans for retirement due to COVID-19, survey says
The coronavirus crisis has forced some to rethink their plans for retirement, a survey found.
The Wells Fargo/Gallup Investor and Retirement Optimism Index, based on interviews with U.S. investors from May 11-17, analyzed the impact of the economic downturn spurred by the coronavirus pandemic on Americans’ plans for retirement and investment confidence, according to a news release.
Unemployment numbers have surged to levels unseen in recent decades in the United States as businesses have been shut down and employees put out of work. During the week ending June 20, an additional 1.48 million Americans filed for unemployment, according to Labor Department Data.
In April, the unemployment rate hit 14.7% before dipping to 13.3% in May — still significantly higher than the peak rate during the Great Recession, per the U.S. Bureau of Labor Statistics.
As of May, the survey found that 27% of “non-retired investors” lost some income or pay and 15% were furloughed or temporarily put out of work, according to the release. Of all investors, 32% reported the coronavirus pandemic has had a negative impact on their “day-to-day financial security.”
Additionally, 30% of employed investors said it’s “very” or “somewhat” likely that they’ll delay their retirement, the survey found, and 29% say it’s likely they’ll have to work more than planned during retirement.
The survey included 1,076 U.S. investors who were at least 18 years old. It considered an investor “an adult in a household with stocks, bonds, or mutual funds of $10,000 or more, either in an investment account or in a self-directed IRA or 401(k) retirement account,” the release says.
Of those who responded, 67% were not retired and 33% were. Forty percent had an annual income of less than $90,000. The survey has a margin of error of plus or minus 5 percentage points.
The survey found that those closer to retirement age have been impacted especially hard by the economic downturn. Of employed investors ages 50 to 64, 40% say they are likely to work more than planned during retirement. Of those ages 18-49, 22% responded the same.
A similar study from TD Ameritrade also found the pandemic has impacted American retirement plans.
The survey, conducted between April 24 and May 4, included 1,008 adults ages 24 and older who had at least $10,000 in inevitable assets. The survey was not probability based and doesn’t have a margin of error, the release says.
About seven in 10 Americans, or 71%, believe the coronavirus pandemic will impact their retirement plans, the survey found, and Generation X is expecting the biggest impacts.
Of Gen X respondents, 39% delayed or considered delaying retirement. Additionally, 29% of Gen X respondents anticipated a severe impact on retirement, compared to 19% of millennials and 15% of Baby Boomers.
But 72% of all surveyed said they plan to prioritize their retirement savings when the pandemic is over.
A majority of investors, 64%, in the Wells Fargo/Gallup Retirement Optimism Index survey said they will set aside more money in an emergency fund as a result of the coronavirus crisis, and nearly half said they are somewhat or very likely to “spend more time creating a long-term financial plan,” according to the release.
“Whether it is the coronavirus or any other catalyst, market downturns are inevitable. It is a matter of when, not if they will happen,” Dan Barry, regional president of Wells Fargo Advisors’ Gateway Region, said in the release. “Having a comprehensive, long-term investment plan is critical to effectively weathering market downturns and preparing for the ‘what if’s’ of retirement.”
Additionally, the survey found investors’ nerves may have been strengthened in 2008-2009.
Three in four investors surveyed said they invested in the stock market in 2008 and 42% reported being more concerned now than they were then. But 28% feel the same level of concern and 30% feel less worried than they were a decade ago. Four in 10 investors say they’ve “gotten better about shrugging off market volatility.”
“Feeling compelled to extend working years to offset losses is something many investors wrestle with — though it’s not always necessary,” Barry said in the release. “As history has shown, assets in a carefully constructed investment strategy often recover if you refrain from making emotional decisions. It’s about prioritizing what is most important, centering your investment strategy around these priorities, and making informed decisions.”
This story was originally published June 25, 2020 at 1:08 PM with the headline "Many Americans forced to change their plans for retirement due to COVID-19, survey says."
