Delta Airlines employees took about $1 billion in early withdrawals from their 401(k) plan last year, according to a recent article in The Atlanta Journal-Constitution.
The significant raiding of retirement funds was seen as an indication that employees were suffering financial hardships as the COVID-19 pandemic ravaged the travel industry.
Atlanta-based Delta, one of the four largest U.S. airlines, had more than 90,000 employees before the pandemic. More than 40,000 of them took voluntary unpaid leave during the pandemic, while many other workers saw their hours and pay cut by 25%, according to the article.
In addition to Delta, the other majors—American, United and Southwest—also cut their employee numbers with early retirement and buyout programs in response to the pandemic. The U.S. Labor Department reported the number of people employed by airlines fell from 742,346 in August 2019 to 718,979 in August 2021.
With its employees under financial stress, Delta CEO Ed Bastian turned to a local nonprofit called Operation HOPE to expand financial coaching for those in need. The article said Delta is paying for 10 coaches to be stationed at its hubs.
“Our whole company sacrificed in 2020,” Delta Vice President Kelley Elliott, who manages compensation and benefits, told the AJC. “We saw that there was a need. Financial well-being is really important.”
Bastian said the coaches, whose services are free to Delta employees, are “non-judgmental” and skilled in helping people.
The article notes that advocates say providing financial coaching isn’t just good for employees—it’s good for companies, too, because actions such as wage garnishments, payday advances and 401k loans are costly to administer.
While Delta restored full pay earlier this year, airline industry losses can mean no bonuses. The article says the last annual bonus in February 2020 amounted to about two months of pay, but there were no bonuses this year, after the company lost $12.4 billion in 2020. The company expects to lose money in 2021, as well, so employees will again miss out on a profit-sharing bonus next February.
The pandemic has been particularly hard on the travel industry for obvious reasons, but financial troubles for employees because of the pandemic is widespread.
According to a recent Bankrate survey, 12% of U.S. adults that currently have a retirement account have withdrawn from it during the pandemic, and another 8% have taken a pre-retirement withdrawal both prior to and during the pandemic. That means one in five adults with a retirement account have taken a preretirement distribution from it since March 2020.
While the CARES Act eased penalties on those needing to take a Coronavirus related distribution from a retirement account, more than half (56%) were taken by mid-career participants (age 35-54).
SEE ALSO:
• How Many Americans Have Taken a Retirement Account Early Withdrawal?
• Pandemic Forcing 29% of 401k Participants to Ponder Early Withdrawals
• By the Numbers: 401k Plan CARES Act Activity
• Airline Industry Headed for Black Thursday with Mass Layoffs Expected
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
