A new report from Goldman Sachs Asset Management delves into the realities of retirement for both workers and retirees in the wake of the COVID-19 pandemic. The research from more than 1,200 respondents (roughly split 50-50 among those currently in retirement and those currently working) aims to “learn directly from plan participants about their experience preparing for, transitioning to, and managing their finances in retirement.”
Financial hardships, potentially brought on by the pandemic, affected retirement savings differently with 89% of workers citing its impact, compared to only 17% of retirees. The hardships could have lasting impact with 83% of workers saying that paying down existing loans will impact retirement savings, compared to 15% of retirees.
More than half of the retirees polled retired earlier than expected, with 24% of respondents forced into retirement due to health concerns, and only 3% of respondents having worked longer than expected. Additionally, the pandemic brought on new worries with retirees feeling most concerned about future healthcare needs, potential reductions in social security, and inflation as they seek to manage retirement finances.
The youngest respondents are expecting to leave the workforce much earlier, however, with 25% of Generation Z respondents planning to retire before the age of 55.
The value of employer-sponsored retirement programs scored high with 56% of retired respondents–and 38% of working respondents–stating that they are the most used source of retirement education.
“Our findings highlight employer-sponsored retirement programs as the biggest source of retirement education across both cohorts,” said Michael Moran, Managing Director at Goldman Sachs Asset Management. “Now, more than ever, we believe plan sponsors should consider employee retirement programs to drive value for their organizations, their employees, and tailor those programs to accommodate a wide range of planning needs.”
Younger workers, women have varied retirement outlooks
The report also found that 25% of Generation Z workers plan to retire before age 55, while roughly 30% of those under age 40 believe they need 60% or less of their pre-retirement income in retirement. This compares to Generation X respondents, who feel they need 80% of their pre-retirement income in retirement. More than 75% of working respondents state that other financial priorities impact their ability to save for retirement.
Earlier reporting noted that women have taken a disproportionate hit on retirement savings and financial well-being, which could bring future repercussions. In Goldman Sachs’ report, women typically planned to retire later than men, with 26% citing age 65-69 for retirement, compared to 32% of men targeting age 60-64. When it comes to retirees, 44% of men retired earlier than expected, while nearly two-thirds of women did the same.
Lynn Brackpool Giles is a contributing editor to 401(k) Specialist. Giles is a former Managing Director of Communications and Consumer Services for the Financial Planning Association (FPA), where she oversaw all corporate, legislative, and consumer communications. In her current journalistic practice, she is a frequent contributor to numerous financial services industry publications.
