Pardon the expression, but Americans were largely caught with their financial pants down as the coronavirus pandemic quickly swept across the country in March and April.
As a result, Americans’ finances are being challenged in ways they rarely have before. And as many shift focus from long-term financial goals to immediate concerns, some have had to back off the accelerator when it comes to their 401k plans and other investments.
More than six in 10 (61%) Americans say the pandemic has negatively impacted their ability to set aside money for savings or investments, according to a new COUNTRY Financial survey.
Nearly half (49%) of Americans say their level of financial security is worse since the COVID-19 pandemic began and one-third (33%) admit they were not financially prepared for a pandemic.
Still, only 11% of Americans have made changes to their retirement plan, with 7% pausing contributions to DC plans and 4% decreasing their contributions, according to the study conducted by Ipsos in partnership with COUNTRY Financial. And 34% of Americans in the survey reported having no retirement plan at all.
While the pandemic has set many Americans back, it also presents an opportunity for advisors to help them regroup and get on the right financial track.
“If you haven’t developed a financial plan, now is the time to kick planning into high gear and assess what your short-term and long-term goals are,” Troy Frerichs, VP of Investment Services at COUNTRY Financial, advises consumers. “If you have developed a plan but haven’t been good about keeping to your goals, now is the time to re-commit and work on developing better personal financial habits.”
Americans shift priorities
In light of the recent pandemic, many Americans are prioritizing day-to-day survival over long-term financial goals. The survey found that approximately four in 10 (45%) Americans say their top financial goal since the pandemic hit is to pay day-to-day expenses, followed by saving for an emergency fund (27%), saving for retirement (16%) and investing in the stock market (5%).
Americans’ plans for their stimulus checks also reflect these changing priorities, with most who expect a check saying they’ll spend it on everyday expenses (38%), while others plan to put the funds towards a mortgage or rent (15%). Only 22% plan to save or invest their stimulus check.
“This is an incredibly difficult time for so many Americans because we have never experienced a pandemic like this before,” Frerichs continued. “At a time when we feel like so much is out of our control, we have to focus on what is in our power, which is how much we spend and what we save. Cut spending where you can and concentrate on paying bills on time to avoid a buildup of debt and fees that will have to be paid later.”
SEE ALSO:
• 3 in 10 Americans Have Recently Tapped Emergency Funds
• Confidence in Retirement Plans High Despite Coronavirus Crisis
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.
