Given the current state of the country, it’s no big surprise Americans are growing increasingly concerned about their prospects for a comfortable retirement.
The July 2020 SimplyWise Retirement Confidence Index found 62% of Americans are more concerned about retirement today compared to how they were feeling about it a year ago. This is up from 56% in the May 2020 Index.
The reported concern was worst for those closest to retirement. For Americans in their 50s, 70% said they are more concerned about retirement than at this time last year.
Seniors also expressed increased anxiety about their retirement. Sixty-one percent of people in their 60s are now more concerned than they were a year ago. Compare this to two months ago, when just 50% of people in their 60s said they were more concerned for their retirement.
For those in their 70s and 80s, 41% are now more concerned about the rest of their retirement, compared to a reported 34% in May.
There was also a divide along political lines. The Index found that Republicans are somewhat more optimistic about their retirement prospects. In fact, 46% of Republicans feel similarly or better about retirement compared to how they felt at this time last year. That is compared to 31% of Democrats who feel similarly or better compared to this time last year—and 69% of Democrats who are now more concerned about retirement.
And there was a gender divide in retirement sentiment. Two in three women reported feeling more concerned about retirement today. On the other hand, just 56% of men feel more concerned about retirement today.
Tapping the 401k early
The latest Index found more Americans today, compared to May of this year, are now planning to withdraw from their 401k.
In May, 20% planned for early withdrawal, but in the July 2020 survey, 24% of those who have a 401k are now considering withdrawing funds.
For those laid off due to the coronavirus, 41% are considering tapping their 401k. And 23% of Americans in their 50s are planning to take out from their 401k, up from the 14% reported in May 2020.
SimplyWise says this may be due to the coronavirus-related CARES Act facilitating easier. Less punitive retirement withdrawals.
Retirement not end of working
The July Index found that more Americans than ever are planning to work into retirement. Today, 72% of workers plan to work after they claim Social Security retirement benefits—up from 67% this May.
The rise in delaying retirement may be attributed to the fact that only 58% of workers surveyed are making what they made prior to COVID-19. That number is worse for minorities; just 50% of Hispanic Americans and 45% of Black Americans are at the same income level they were pre-COVID.
By comparison, 67% of White Americans are at the same income level they were pre-COVID.
More key findings
- Half of Americans believe they will outlive their retirement savings
- 72% now plan to work in retirement (up from 67% in May)
- 24% are now planning to tap their 401k, including 41% of those laid off due to COVID-19
- 55% were concerned that Social Security would dry up before they retired
- Four in 10 Americans fear they will not be able to retire at all
- 41% of Democrats vs. 27% of Republicans were concerned they not be able to retire at all
- 65% of those in their 40s and 60% in their 50s believe their quality of life will decline in retirement
The study was conducted as an online survey of 1,128 Americans ages 18+ between July 3-6, 2020. It explored how people are looking at retirement, Social Security, and savings today, particularly in light of COVID-19.
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.
