Surprisingly, 26% of Americans said they’d be willing to trade an additional six months of quarantine for an earlier retirement – an interesting conundrum for people who haven’t started saving for that retirement.
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Over a quarter of Americans have put saving for retirement on hold since the pandemic, according to the second annual survey by FinanceBuzz. A survey of 1,000 adults in July found 27% have stopped saving for retirement, or reduced the amount they were setting aside.
What’s worse is that over one in five Americans haven’t even started saving for retirement, including 20% of Millennials and almost 16% of Gen Xers.
Aly Russo, senior outreach specialist at FinanceBuzz, believes that respondents’ professed preference for quarantine over working longer is related to their lack of retirement preparedness.
“Most people want to retire at 50 or 55, and don’t think they can until 65 or 70,” she said. “In that question, we asked what would you give up now if we could give you a magical early retirement, and that was one of our top answers, to quarantine for an additional six months.”
The pandemic isn’t the only reason Americans aren’t saving. Almost half of Millennials say student loan debt is preventing them from setting aside money for their later years. Thirty-nine percent of Millennials and 37% of Gen Xers say credit card debt is a hurdle they can’t jump.
Russo pointed out that on top of 21% of respondents who haven’t started saving, 34% have no idea how much they need to save. These respondents lack the financial education to develop a clear plan for the future, she said.
“I think, unfortunately, a lot of people are relying on the government, and are hoping for the best,” she said. “Trying to [bring] light to those small, realistic steps you can take, I think, is most important right now.”
Gen Z is naturally the generation most likely to say they don’t know how much they need to save, but Gen X is more likely than Millennials or Boomers to say they have no idea how much they need.
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Some reassuring news out of the survey: 33.75% of respondents who are saving for retirement are saving between 6% and 10%, and 33.21% are saving at even higher rates. Furthermore, only 9% of respondents had to take a loan or withdrawal from their retirement account due to the pandemic, Russo said.
“It just goes back to if you want to retire early, think about your priorities today,” she said. “Forming these habits, even if they’re small now … really pays off in the long run. It could save you years of working in the future.”