New data from personal finance and investing app Stash shows a large surge in retirement account openings—particularly among retirees—since March 2020, when the coronavirus-fueled economic crisis began.
As the COVID-19 pandemic stretches on, with record unemployment and increasing economic uncertainty, more U.S. consumers, Stash says, are eager to save money to weather the storm.
Stash reports it saw a roughly 60% increase in new Roth and traditional IRA account creations between March and June 2020, compared to the preceding four months.
Notably, of these new accounts, the largest increase for the four-month period was among people 65 and older, where account creation increased 76%. In addition, account creation increased 211% over the same time period for those earning over $100,000.
There was a 54% increase among those earning between $25,000 and $50,0000, and a 74% increase in account creation for those earning $50,000 to $100,000.
The average age of Stash’s approximately five million users is 30, and the average annual income is $50,000. The New York City-based company offers retirement, banking, individual investment, and custodial accounts under a three-tiered subscription model.
Stash said in releasing the new data that financial stress caused by the pandemic could keep pushing consumers to save their money instead of spending it. As of April, 2020, it says Americans were saving 33% of their disposable income, a record percentage, citing a CNBC story.
“It’s been a wake-up call for people who haven’t actually contributed—the chaos and instability of COVID-19 has brought [retirement planning] to the forefront,” Mindy Yu, director of investments at Stash, told Business Insider.
Yu added that the surge could be explained in part by the SECURE Act raising the age people must take required minimum distributions (RMDs) from retirement accounts to 72 from 70.5 and removing the age limit to contribute to IRAs. Together, she said, these revised regulations have given retirees more time to save.
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.
