How Will COVID-19 impact retirement planning? New research finds older Americans might have to delay retirement due to the coronavirus pandemic.
The financial fallout from the coronavirus pandemic is already devastating to millions of consumers.
More than 40 percent of Americans say their level of financial security has deteriorated since the COVID-19 pandemic began. Around 30 million Americans are out of work and economists think up to 45 million could be unemployed by the time the tide turns.
Nearly 40 percent of Americans are worried about their investments, 25 percent are unsure about their job security, 18 percent question whether they’ll be able to pay their rent and 14 percent are concerned about being able to pay monthly expenses, according to the most recent Equifax Consumer Credit Confidence Survey. Of those with medical bills, 27 percent worry they won’t be able to pay them.
COVID-19 has brought a dark cloud over retirement planning. Over 35 percent of those aged 45-64 expect to delay their retirement due to the coronavirus pandemic, according to research by personal finance resource MoneyRates.com.
How Will COVID-19 Impact Retirement Planning?
Nearly 60 percent of Americans aged 45-64 report retirement plan losses at the end of March 2020. More than 20 percent were unable to determine exactly how much they lost. Roughly 15 percent expect this setback to delay retirement by more than 5 years. Separately, 10 percent of Americans in the same age group aren’t sure how their investments are doing because they’re too scared to look.
Almost 40 percent of those within 20 years of retiring have either lost their jobs or had their income cut due to the COVID-19 pandemic. More than 25 percent of them have tapped retirement savings or expect they will have to to make ends meet. Over 40 percent say they might need to pull from their retirement savings before the crisis is over, but will only do so as a last resort.
“Dipping into retirement savings is not a cost-free source of money,” cautions Richard Barrington, personal finance expert for MoneyRates.com. “Even though tax penalties have been temporarily loosened, you risk missing out on years of potential investment growth before you replace the money you took out. And, while you are replacing that money, you are likely to have to reduce future contributions.”