Not that it’s much of a surprise, give human behavior and market shocks, but one in four Americans now say they have a lower risk tolerance for future retirement investments because of the COVID-19 pandemic.
The Alliance for Lifetime Income also found that three out of four respondents said they are concerned about the pandemic’s impact on retirement investments. Of those concerned about the impact of COVID-19 on retirement investments, 54 percent say their concern is due to future unpredictability.
Losses in the stock market topped health care costs by a 15-point margin as the leading concern of those lacking confidence that their income will cover their expenses in retirement.
“The stock market’s historic drop in March was followed by its best month in more than 30 years, which has left many retirement investors with whiplash,” Jean Statler, CEO of the Alliance said in a statement. “The pandemic and resulting economic conditions have introduced historic levels of uncertainty, leading many Americans to reconsider the risks to their retirement portfolios and the importance of having a source of protected income in their plans to provide a level of certainty. Americans want to feel confident that they won’t run out of money in retirement.”
The Alliance’s COVID-19 Retirement Reset Tracker is an ongoing effort to measure the impact of the crisis on the retirement planning behaviors, perceptions, and attitudes of Americans who are approaching retirement or are currently retired. It found:
Emotional responses to the investing environment
- Watching the markets closely (37%) vs. Ignoring the markets as much as possible (63%)
- Active in the market (13%) vs. Holding my ground in the market (87%)
- Agitated (52%) vs. Numb (48%)
Levels of optimism
- S. economic situation: 8% extremely optimistic vs. 40% extremely pessimistic
- Own financial situation: 33% extremely optimistic vs. 9% extremely pessimistic
Investing and financial behavior
- Spending less (71%) vs. Spending more (4%)
- Investing less (19%) vs. Investing more (6%)