Retirees are coping with the effects of COVID-19 far better than younger generations, despite the pandemic’s severe and disproportionate impact on the health of aging adults, according to a landmark new study.
The Edward Jones and Age Wave research released Aug. 4, “The Four Pillars of the New Retirement,” finds that in the U.S. an alarming 37% of Gen Z, 27% of Millennials and 25% of Gen Xers said they have suffered mental health declines since the pandemic began, while only 15% of Boomers and 8% of Silent Generation respondents said the same.
The 9,000-person, five-generation study in the U.S. and Canada also reveals a new definition for retirement that is far more than simply the end of work. The majority of U.S. retirees (55%) define retirement as a whole new chapter filled with new choices, freedoms and challenges, and they do so in a more holistic way across four important areas of health, family, purpose and finance.
“COVID-19’s impact forever changed the reality of many Americans, yet we’ve observed a resilience among U.S. retirees in contrast to younger generations,” said Ken Dychtwald, Ph.D., psychologist/gerontologist and founder and CEO of Age Wave. “Older Americans tend to recognize the value of a long-term view, and so as they think about their lives, longevity and legacy, they’re able to pull from an array of experiences that help them weather current storms, feel gratitude about many aspects of their lives and still plan for the future.”
The landmark Edward Jones and Age Wave research uncovered a new definition for retirement, as far more than simply the end of work. The majority of U.S. retirees (55%) defined retirement as a whole new chapter filled with new choices, freedoms and challenges, and they do so in a more holistic way across four important areas of health, family, purpose and finance.
COVID-19’s impact on family closeness, finances
COVID-19’s initial dramatic impact on the U.S. economy and personal financial situations may very well leave long-lasting implications. Reflecting a great deal of generational generosity, an estimated 24 million Americans have provided financial support to adult children due to COVID-19, and an overwhelming 71% of retirees said they would offer financial support to their family even if it could jeopardize their own financial future.
Despite COVID-19’s negative impact on finances, 67% of Americans said the pandemic has brought their families closer together. The research also revealed that 20 million Americans stopped making retirement savings contributions during the COVID-19 pandemic and only a quarter of working Americans were on track with their retirement savings prior to the pandemic.
“We’ve certainly seen COVID-19’s disruptive force on finances, with the pandemic influencing retirement timing and financial confidence,” said Ken Cella, Edward Jones Client Services Group Principal. “However, this cloud has brought several silver linings in terms of family closeness and important discussions about planning earlier for retirement, saving more for emergencies and even talking through end-of-life plans and long-term care costs.”
Relationships as predictor of health and purpose
While loneliness is pervasive across all five generations, as people age, physical isolation becomes a greater health risk, as deadly as smoking a pack of cigarettes a day, and it is linked to increased risk for heart disease and dementia. While most retirees (76%) said they derive the greatest sense of purpose from social relationships, specifically time spent with loved ones, 72% noted that one of their biggest fears is becoming a burden on their families.
“Retirees say they miss people and purpose, not paychecks, when they retire, but 31% of new retirees are struggling to find purpose in this stage of life. They want to feel useful, not just youthful, and keep learning and growing at every age,” Dychtwald added.
The study found that 89% of all Americans feel that there should be more ways for retirees to use their talents and knowledge for the benefit of their communities and society at large.
Advisors as connectors and confidence builders
As Americans redefine retirement in a broader way across the four pillars, the majority of U.S. respondents felt their ideal financial advisor is a guide who can understand them and help them achieve their goals. In fact, 84% of those working with a financial advisor said that their financial advisor relationship gave them a greater sense of comfort regarding their finances during the pandemic.
Further underscoring the fundamental importance of financial security, retirees are often met by new challenges as they enter retirement. Thirty-six percent of retirees said managing money in retirement is more confusing than saving for retirement, and they want help navigating.
Fifty-two percent of retirees cited healthcare costs, including long-term care, as the most common financial worry. This concern was also echoed by pre-retirees as more than two-thirds (68%) of those who plan to retire in the next 10 years said they have no idea what their healthcare and long-term care costs will be in retirement.
“Beyond finances, we can help our clients envision and truly realize a holistic retirement, which, we know includes decisions about their health, family and purpose,” said Cella. “Empathy and knowledge allow us to better serve our clients in a human-centered way and work together to achieve what’s most important to them and their families.”
While the above findings feature a selection of respondents’ thoughts regarding the new definition of retirement, further examination of the four pillars of health, family, purpose and finances reveal their highly intertwined nature and influence in shaping retirees’ overall quality of life.
For more details from The Four Pillars of the New Retirement, visit www.EdwardJones.com/NewRetirement.