New Society of Actuaries’ research about the COVID-19 pandemic and its potential impact on retirement-related topics made an important and largely overlooked point about its dual nature.
“Retirees with less than $50,000 in assets are three times more likely to be concerned about running out of money in retirement than those with more than $250,000.”
“The impact of this crisis is complicated because while it caused economic turmoil and unemployment, it also coincided with a stock market gain and reduced spending, both of which can have a positive financial impact on older adults who hold investments,” the SOA wrote in its 2021 Retirement Risk Survey. “Retirees, who are no longer working, are less likely to be affected by job loss although some still need or aspire to work in retirement.”
Noting that the pandemic has affected retirement finances for pre-retirees and retirees differently, 27% of pre-retirees and 18% of retirees said it negatively impacted their financial situation. According to the authors, it compared with only 13% of pre-retirees and 11% of retirees who feel it had a positive.
Unsurprisingly, it also found those with lower income and assets are more likely to be more concerned with and challenged by their finances.
“For example, retirees with less than $50,000 in assets are three times more likely to be concerned about running out of money in retirement than those with more than $250,000 (51% vs. 17%) or that they will be unable to maintain their standard of living for the rest of their life (48% vs. 16%),” the report stated.
Good news/bad news
Other topics include the critical role support systems play in successful retirement outcomes, and a bit of good news/bad news surrounding the levels of concern about various retirement risks, with retirees less concerned than in previous research, while pre-retirees are more concerned.
“Pre-retirees’ levels of concern regarding various retirement risks are similar to those that have been reported in previous years. In contrast, retirees’ levels of concern are down significantly from 2019,” the SOA concluded. “Two areas that retirees were less concerned about than in 2019 were their ability to maintain their standard of living in retirement and their ability to fund health and long-term care needs. The gap between retiree and pre-retiree concerns has always existed but was significantly higher in 2021.”
See the Report Highlights Here