A pandemic-high 29% of 401(k) plan participants are now planning to withdraw early from their account to pay the bills according to a new survey, up significantly from 20% who said the same back in May.
The November SimpyWise Retirement Confidence Index found there was again a racial divide in plans to tap 401(k)s. Of Black Americans, an alarming 44% are now planning to withdraw, compared to 41% of Hispanic Americans and just 24% of White Americans. For those laid off due to the coronavirus, 40% are considering tapping their 401(k).
The index also found that nearly six in 10 (59%) of all Americans are more concerned about their retirement today compared to a year ago. This is compared to 56% in May, 62% in July, and 58% in September.
More scary retirement findings from the report include that nearly half of people laid off or furloughed due to COVID-19 saved $0 for retirement in the last year—up significantly from 27% in September, the last time the survey was conducted. And 19% of people in their 50s now plan to work full-time in retirement (up from 8% in May, when the first iteration of the survey was conducted).
For those not yet claiming Social Security benefits, financial concerns are among the highest anxieties for retirement. Fifty-three percent worry about Social Security drying up, and 50% worry they will outlive their savings. Another 46% worry about paying medical bills, and 41% more generally worry about their ability to pay daily living expenses when they retire.
For Americans already claiming Social Security, 55% now worry about their benefits drying up—a significant increase from the 45% reported in May. A pandemic high of 43% of beneficiaries now worry about outliving their savings in retirement. That is up from 38% in May.
Of people in their 50s, 22% are now planning to postpone retirement from work, given the current economic climate. Of people in their 60s, 15% are now planning to postpone retirement. And of people in their 50s and 60s, 32% are now planning to or are delaying Social Security retirement benefits. Those plans may be attributed to the fact that only 61% of workers in their 50s and 60s are making the same income they did prior to the pandemic.
At the same time, COVID-19 has pushed many others into early retirement, whether because of health concerns in going back to work; offerings of early retirement packages; or being let go. Of all those who lost their job or were furloughed in the pandemic, 10% are now planning to retire earlier than anticipated.
For Americans in their 50s and 60s, one in 10 are now planning to retire earlier than intended. And 13% in their 50s and 60s are now considering claiming Social Security retirement benefits early.
Similar to the results of the May, July and September 2020 surveys, the November Index found that 42% of American workers fear they will not be able to retire at all. For Americans in their 50s, one in three worry they will not be able to retire. But that number remains highest for younger workers. Indeed, 46% of Millennials today worry they will have to work for their whole lives.
More survey findings
Other key findings from the bi-monthly report included:
- 71% of Americans 70+ are now concerned about Social Security running out—up from 29% in July.
- 47% of Americans experienced an attempted Social Security scam in the last 3 months.
- 34% of Americans are now planning to change their investment strategy to keep more in cash accounts.
- 56% of Americans are willing to risk getting COVID in order to work, including 35% of seniors (60+).
- 94% of Democrats vs. 63% of Republicans are willing to follow a national mask mandate if instituted.
The bi-monthly index has tracked sentiment regarding retirement and savings over the course of the pandemic. Now in its fourth iteration, the survey continues to find that a majority of Americans (59%) are more concerned about retirement today compared to a year ago.
The latest index polled 1,090 Americans ages 18+ between November 8-10, 2020. The survey explored how citizens are approaching savings, Social Security, and retirement, especially given the recent election and worsening situation around COVID-19.
“You need to do what is right for your personal financial situation to get through these challenging times,” says Sam Abbas, CEO of SimplyWise, a New York-based savings fintech. “But given today’s uncertainty, it’s more important than ever that when you’re back on your feet, you prioritize organizing your finances, understanding what you’re owed in earned, spousal or survivor benefits from Social Security, and investing in your future.”