Americans would rather put money toward an emergency fund (65%) than spend money on a vacation (35%), save money for retirement (79%) rather than save money for a wedding or another big event (21%), and contribute $100 toward their 401k (62%) rather than spend $100 on a feel-good purchase (38%).
These are among the insights from a survey released today from Fidelity Investments as we near the second anniversary of the COVID-19 shutdown in the United States. Fidelity’s new research reveals consumers are taking new measures to adapt their investing habits and attitudes, with the majority making shifts to reprioritize long-term financial goals.
Choosing to put money into their 401k over a feel-good purchase is especially true when looking at individuals with a retirement plan (72%), the study found. In addition, more women (81%) are prioritizing saving for retirement than saving for a wedding or another big event.
“These shifts are impacting how people are choosing to spend, save, and invest their money, on their own and through their employer’s retirement plan.”
Roberta King, Fidelity Investments
“In the last two years, we saw an increased emphasis on short-term investing and spending habits, but as this period of turmoil from the pandemic, market volatility, inflation, and geopolitical events continues, we’re seeing shifts to longer-term planning and saving,” said Roberta King, VP and branch leader at a Fidelity Investments Investor Center. “These shifts are impacting how people are choosing to spend, save, and invest their money, on their own and through their employer’s retirement plan.”
According to the study, over three-in-five (63%) actively investing U.S. adults have changed their investing habits in some way since the start of the COVID-19 pandemic, with roughly three-quarters (76%) prioritizing long-term gains over short-term when investing and over three-in-five (63%) prioritizing low risk, low reward investments over risky, high-reward trades.
Seven out of 10 (70%) are more focused on the money they make from an investment than the type of company they’re investing in. Many consumers are also becoming more aware of how they are spending money as they worry over their ability to save, with inflation being a top of concern right now compared to pre-pandemic.
Following some of the trends stemming from events in the past two years of uncertainty—the “YOLO economy,” “revenge travel,” and “The Great Resignation” for example—Fidelity’s latest survey has identified that American consumers have made a couple of other key shifts since the start of the pandemic toward saving and investing for the long-term, including:
- Adapting their investing habits: Among those Americans actively investing, many have begun investing for the first time (9%), increased how much they’re investing (20%), and changed the types of investments they’re making (19%) since the beginning of the pandemic. They are also prioritizing long-term retirement plans over short-term workplace benefits: nearly three-in-five (57%) would prefer a higher company match on their current retirement plan than additional paid time off over what they currently get (43%), and over half (56%) would prefer a strong retirement plan match over full-time remote work (44%). Interestingly, consumers aged 18-35 tend to disagree on paid time off. More than half (54%) of these young investors, who are experiencing the combination of these external events for the first time in their lives, would rather have more days away from work than a higher company workplace retirement plan match policy.
- Uncovering their need for financial education: Half (51%) of those Americans currently investing and/or saving in some manner are feeling like they are not investing as much as they want to be, with many attributing it to a lack of knowledge about investing (31%). The study found those who work with a financial advisor for help with education and advice are much more likely to prioritize long-term financial goals, choosing things like a more robust company retirement plan match (72% vs. 57% overall) over more paid time off (28% vs. 43% overall) more than the general population. Budgeting and saving (85%), inflation (81%) and retirement accounts (78%) are the top areas Americans find important to successfully manage their finances.
“This is not the first priority shift we’ve seen from consumers since the start of the pandemic and I doubt it will be the last,” Roberta King said. “We are seeing continued record growth at Fidelity across customers, assets, and engagement, in part, by the ongoing market volatility over the last two years, reinforcing the need for financial education. We are here to help people navigate these changes and provide guidance as the landscape continues to evolve.”
SEE ALSO:
• Record 401k Balances, Contributions, Millionaires at Fidelity
• Americans Worries Shift from Pandemic to Rising Inflation in 2022
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.
