Alarming Percentage of Workers Think Pandemic Will Impact Path to Retirement

Pandemic retirement, workers

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Nearly two-thirds of workers anticipate the COVID-19 pandemic will impact their path to retirement, according to results released today from the quarterly Principal Retirement Security Survey (3rd Quarter 2020).

During August and September, Principal surveyed more than 630 retirees and workers across the U.S. to get a pulse of consumer concerns and actions surrounding saving for retirement, their financial behaviors related to market volatility, COVID-19, and the upcoming election.

While most workers (55%) say the pandemic will have a “moderate” impact on their path to retirement, another 10% say it will have a “severe” impact while 35% say it will have no impact.

Sri Reddy

“Nearly two-thirds of workers anticipate the pandemic will somehow impact their path to retirement,” said Sri Reddy, senior vice president of Retirement and Income Solutions at Principal. “Uncertainty is part of life. The good news is we can take small measures to support our long-term resilience against unpredictable shocks in the future.”

What are workers most concerned about right now? Small businesses in their community staying in business topped the list, with 42% admitting being “very concerned.” That was followed by:

A couple of other worries of note? Having less income in retirement based on a decline in retirement savings (26%) and delaying retirement (18%).

When asked how they will pay for essential living expenses in retirement, 87% said Social Security and 86% said periodic withdrawals from retirement accounts including 401ks, 403bs and/or IRAs. Seventy-eight percent said defined benefit payments, and 31% said guaranteed income such as an annuity.

Recent changes workers made to retirement accounts

Retirees anxious about long-term outlook

The survey also focused on top concerns of current retirees in addition to those of workers. While today’s retirees largely report they are “staying the course” with their savings and investment decisions, six in 10 retirees say they are anxious about the economic outlook for 2021 in light of escalation of the COVID-19 pandemic and the upcoming presidential election.

While retirees report being most concerned about children and teachers staying safe this school year, retirees are also particularly concerned about COVID-19’s long-term financial implications for themselves and their families, as well as for the small businesses in their communities.

“This survey provides useful insights about the issues that are important to retirees and near-retirees in the current environment,” Reddy said. “Their perspectives and sentiments are important to understand so we can help identify further actions that could help promote their financial security today and into the future.”

According to the research, the percentage of retirees who report they are happier in retirement decreased from first quarter Principal research conducted before the pandemic (from 51% to 41%). Retirees share that they struggle with imagining their life in retirement and are unsure how they’ll spend their time—citing not being able to travel (61%) or see family (58%) and planning for health care and long-term care costs (44%).

Retirees react to COVID-19 and election season

Nearly 50% of retirees say they are not changing investments and saving strategies due to any election related outcomes. They hold that the election may have a short-term effect on the market; however, the majority understand retirement and investing is long term.

In fact, more than 20% of retirees said their accounts would have to decline by over $25,000 before they would consider changing their investment strategy.

Retirees are responding to COVID-19 with financial health and wellness measures in mind:

More than half of retirees say they are consolidating finances—including accounts and numbers of financial professionals they work with. The latest Principal Retirement Security Survey, the company said, provides financial professionals with timely reasons to reach out to retirees and those nearing retirement to position themselves as a “go to” financial professional.

Retirees in the survey were also asked to reflect on the financial advice they would give their younger selves. When it comes to saving and investing, the majority of retirees recommend starting to plan early (69%), even during 20s as they enter the workforce. Retirees highlight more advice:

SEE ALSO: Pandemic Hurts Worker Confidence in Saving for Retirement

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