It’s been a daunting and unpredictable 18 months, and while Americans are still saving for retirement, they are having to make adjustments along the way.
According to Living in the COVID-19 Pandemic: The Health, Finances, and Retirement Prospects of Four Generations, a new study from nonprofit Transamerica Center for Retirement Studies in collaboration with Transamerica Institute, 60% of employed workers made adjustments due to pandemic-related financial strain. Adjustments included reducing day-to-day expenses, dipping into savings accounts, accumulating new credit card debt, and reducing or stopping contributions to retirement accounts. On the upside, 82% report that they are continuing to save for retirement through employer-sponsored plans, as well as outside the workplace.
A significant number of the respondents (43%) say they experienced one or more negative impacts to their employment, including reduced hours, reduced salaries, furloughs, layoffs, and early retirement.
Adjustments, outlook vary by generation
The report also examined the retirement outlook of four generations, noting the experiences of workers can impact health, financial well-being, and ability to save and invest for retirement. Among the findings:
- Millennials, Generation Z, and Generation X (71, 69, and 59 percent, respectively) are more likely than Baby Boomers (40%) to have made any adjustments.
- Generation Z (59%) is more likely to have been negatively impacted than Millennials, Generation X, and Baby Boomers (51, 39, and 30 percent, respectively).
- Overall, workers have only $5,000 (median) in emergency savings to specifically cover the cost of unexpected major financial setbacks and that number varies by generation: Generation Z held $2,000, Millennials have saved $5,000, Generation X have saved $6,000, and Baby Boomers have saved $10,000.
- One in five workers expects to retire later because of the pandemic, with Millennials being more likely to expect to do so (28%).
- Sixteen percent of workers across generations indicate their retirement confidence has declined as a result of the pandemic.
“Given the magnitude of challenges workers have faced during the pandemic, it is truly remarkable that they have maintained focus on their future retirement. However, before the pandemic and today, many workers continue to be at risk of not achieving a financially secure retirement,” said Catherine Collinson, CEO, and president of Transamerica Institute and TCRS.