The economic fallout from the COVID-19 pandemic has caused American workers concern over their retirement. A recent Secure Retirement Institute® (SRI®) survey reveals that less than half of American workers (49%) are confident they will be able to live the retirement lifestyle they want, down 6 percentage points from 2019.
October marks National Retirement Security Month, and we explored how the current pandemic and resulting economic conditions are impacting consumers’ feelings about retirement. Since 2013, SRI has asked consumers about their retirement confidence via an annual consumer survey measuring two vital concepts: being able to live the lifestyle they want in retirement and saving enough money to last throughout retirement.
In the 2020 survey, 56% of non-retired workers expressed concern about the long-term impact the coronavirus outbreak will have on their financial security in retirement.
When it comes to saving for retirement, 44% of workers said the coronavirus outbreak has had a negative impact on their household’s ability to save for retirement. According to data from the Federal Reserve, which was done prior to the pandemic, a little more than a quarter (26%) of non-retired Americans indicate that they currently have no retirement savings or pension whatsoever. In a LIMRA consumer sentiment study in July, 37% of workers said the economic downturn is affecting their ability to save for retirement.
“Since 5% of workers surveyed had been laid off or lost a job, and another 36% were earning less income due to reduced hours or a pay cut as a result of the pandemic, it’s no surprise that people are concerned about their retirement security,” said Matthew Drinkwater, Ph.D., corporate vice president and SRI research director.
The study finds women are less confident than men that they will be able to live their desired retirement lifestyle. This is likely because, on average, women live longer, are more likely to need long-term care, are more likely to be caregivers themselves, and are more likely to earn and have saved less than men.
Market volatility is also worrying American workers. More than a third of workers (36%) are so concerned about the impact of the market volatility on their retirement savings plans that they say they avoid looking at their account balance.
“It’s clear that Americans have a lot of competing day-to-day priorities with the pandemic and the economic conditions,” Drinkwater said. “It’s important that they also keep their future retirement plans in view.”