The COVID-19 pandemic altered financial security for the American workforce, with many taking hardship withdrawals, spending emergency savings, or halting retirement contributions due to the pandemic’s impacts.
Now, those affected are still reeling three years later, and as a result, face insecurity about their retirement confidence.
A new report by Equitable, “Financial Protection as an Asset Class,” found four in 10 Americans are less confident in their ability to achieve their retirement goals than before the pandemic, with 77% of respondents citing increasing prices and 72% naming reduced spending power as a concern.
Almost half of the respondents in Equitable’s report have acted on their concerns since the pandemic’s onset, with some changing their investment strategies, saving more towards retirement, pursuing part-time work or a new career, and delaying retirement or taking loans from retirement savings.
Others say utilizing financial protection products, like annuities, has helped them with financial anxiety. Two in three respondents ranked monthly guaranteed money to cover living expenses as their top retirement goal, with protection of savings following at 60%, and over 50% of respondents said they are currently invested in a financial protection product such as annuities or life insurance, and almost half are currently invested in, or considering, annuities.
The findings come as more Americans are familiarizing themselves with annuity products. In a recent interview with 401k Specialist, Stephen Dunbar, managing partner at Equitable Advisors, said he’s noticed an uptick in annuity interest from his clients. “We’re finding now that the investor has a much better understanding of annuities, advisors are doing a better job at educating people and you’re hearing it talked more about in the public media,” he said. “With volatility and people feeling a lack of control with finances, the idea of guaranteed products starts to feel really good.”
Lifetime guaranteed income products rose in interest during the COVID-19 pandemic, and total U.S. annuity sales went up 16% in 2021, reaching their highest level in 14 years. According to Equitable, two-thirds of those between ages 35 to 52 report being more interested in financial protection products as a response to the pandemic. Those considering a financial advisor are most likely to come to the professional with some interest in annuity products, finds Equitable.
Additionally, more than six in 10 U.S. household decisionmakers report awareness with financial protection products, with more affluent respondents citing the most familiarity. More than half of survey takers say they are comfortable with financial protection product investments, and nearly half recognize such products can help protect their investments from rising inflation and sustained market downturns.
Among those invested in financial protection products, 58% are confident that these types of products will have a positive impact on their retirement goals, and only 11% say they are not confident of that positive impact.
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