Not that it’s necessarily a surprise, but concerning nonetheless.
Approximately one-third (31%) of respondents have lost their entire income since the pandemic, according to a recent survey from FlexJobs and Prudential.
Almost half (46%) say their emergency savings wouldn’t last them more than three months and roughly a quarter (24%) said their savings would not even last one month. Overall, 62% of those surveyed do not have enough emergency savings to last six months.
Lack of financial wellness
As a result of the pandemic, many have experienced a significant shift in their financial stability:
- 44% of respondents reported that they are currently struggling financially, whereas only 24% reported the same thing before the pandemic
- 21% said they were financially secure before COVID-19, and only 10% say the same thing now.
Immediate financial steps taken
84% of respondents are taking specific steps regarding their finances, many of which may have a negative long-term impact on their financial health, especially on their retirement planning.
Collectively, 1 in 5 respondents made changes to their retirement savings, including stopping or reducing retirement contributions (12%) or withdrawing from their retirement savings (8%).
Other actions that people have taken or plan to take in the next three to six months to address their financial situation as a result of COVID-19 are:
- Try to pick-up extra work/hours, looking for sources of additional income (49%)
- Build my emergency savings (28%)
- File for unemployment (28%)
- Delay a major purchase, such as a car (25%)
- Use my emergency savings (23%)
Pre-COVID-19 finances
The pandemic has only exacerbated tenuous financial conditions for many in the flexible workforce.
- Just 30% agreed that they had a good plan in place in case they got sick or needed care in the short-term, and even fewer strongly agreed (12%).
- Although over two-thirds say personal financial wellness is a key priority, only 50% agreed that they felt prepared to make informed decisions about their finances. When asked what’s keeping them back from feeling well-prepared, respondents cited the following obstacles:
- Don’t know how to evaluate the different options (27%)
- Don’t know what options are even available to them (23%)
- Didn’t have strong role models when it comes to finances (23%)
- Don’t understand the financial terms/jargon used (21%)
- Not earning enough money (44%), high cost of living expenses (35%) and too much debt (26%) were the top reported reasons for not meeting financial goals before COVID-19.
- Other factors preventing people from reaching their financial goals included not being disciplined enough about finances (23%), not having enough time to focus on financial goals (16%), and not having access to workplace benefits (e.g., health/dental/vision insurance, paid time off, disability insurance) (15%).
“The pandemic exposed the widening gap between the financially secure and insecure in this country – with people of color, women, younger generations, gig workers, and the retail workforce disproportionately impacted,” Jake Biscoglio, Vice President of Strategic Growth Initiatives at Prudential, said in a statement. “Beyond a paycheck, employers play an essential role in providing meaningful resources and benefits that can support an inclusive recovery.”
Products accessed
Respondents indicated that they or their spouses had:
Financial products: 97% have at least one kind of financial product
- Checking accounts, savings accounts, money market accounts, or certificates of deposit (93%)
- Employer-sponsored retirement plan (401(k), 403(b), 457, pension, etc.) (52%)
- Individual Retirement Account (IRA) that is NOT employer-sponsored (41%)
- Investment accounts, NOT retirement-related (Individual stocks/bonds, mutual funds, ETFs, etc.) (31%)
- Health Savings Account (25%)
- Education investment or savings account (529, Coverdell, etc.) (10%)
Insurance products: 87% have at least one kind of insurance product
- Health insurance through an employer (57%)
- Life insurance through your employer (33%)
- Life insurance purchased on your own (not through an employer) (31%)
- Health insurance not purchased through your employer (ACA, private plans, long-term care, critical illness, etc.) (26%)
- Disability insurance (14%)
- None of these (13%)
- Fixed or Variable Annuity (4%)
Estate planning products: More than half do not have any estate planning products
- Will, estate plan, or trust (33%)
- Healthcare proxy, living will, or power of attorney (24%)
- None (56%)
On the job highlights
- 46% of full-time employed respondents said their regular job was temporarily being done from home; 20% of total respondents were already working remotely
- 24% are currently using remote work to supplement their income
- If given a choice, 71% would prefer to work remotely full-time once the pandemic is over, and 25% would prefer a combination of remote and office work
- 56% say they view remote work more favorably as a result of the pandemic
- Roughly 1 in 5 (22%) are hoping to find a part-time or side gig to earn supplemental income
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.