The COVID-19 pandemic scared more Americans to put more money away for retirement.
Pollsters from D.C.-based business and finance publisher Kipling and wealth management firm Personal Capital quizzed U.S. adults over the age of 40 on their views of retirement. Three-fourths said they fear rising costs of inflation may impact their ability to live comfortably once they leave the workforce.
In the national survey of more than 700 Americans, 1 in 3, said “the pandemic has convinced them they’ll need a bigger nest egg for retirement.” Even better: those who are planning to retire in the next five years said they “have already started saving more.”
The century-old personal finance magazine’s editor, Mark Solheim, sees that as a silver lining in the data.
“It’s clear that some effects of the pandemic – spiking consumer prices, an uncertain economy and stock market, and worries about the financial future of government safety nets – is creating unease among retirees and those nearing retirement,” Solheim said. “Fortunately, the savings rate has jumped, and those still working are taking action to create a more secure retirement.”
Since last March, when the president declared the pandemic a national emergency, Debt.com has been reporting on COVID’s financial impact on Americans. Below are a few reasons why they’re scared of having enough for retirement.
“Pandemic price hikes”
Less than three weeks ago, Debt.com reported “9 in 10 Americans say they’re paying higher prices on everyday expenses in 2021.”
Those findings were from a joint survey by personal finance site Bankrate and YouGov. Further, a report from the Bureau of Labor Statistics revealed a “5.4 percent rise in food, gas and utilities, transportation, medical care, housing and new and used cars and trucks.”
Who was hit most? The same pre-retired and retired age groups Kiplinger and Personal Capital polled: everyone over the age of 40.
Older consumers were also reportedly “more likely to notice an increase in prices” than their younger counterparts.
Nearly 9 in 10 – 89 percent to be exact – of baby boomers said costs of groceries were up. Seventy-nine percent of Gen Xers said the same. Meanwhile, only 40 percent of millennials noticed an increase in their grocery bills.
The “new world” of retirement planning
Last June, Debt.com reported the headline “6 Ways the Coronavirus Crisis Affects Americans’ Retirement Plans.”
That same month, financial products site LendEDU asked 1,000 U.S. adults “Are you concerned that the coronavirus and its impacts will seriously damage your retirement savings and plans?” An astounding 72 percent said “Yes.”
More than half (56 percent) of Americans polled by financial services company SimplyWise said they were “more concerned about their retirement plans today than they were in 2019.”
The global health crisis made many Americans rethink their choices with health and finances alike.
From November through December 2020, Debt.com and HerMoney asked more than 1,000 U.S. adults if the pandemic changed their views on spending and saving.
More than a quarter (27 percent) said they were “paying more attention to retirement savings.”
Howard Dvorkin, CPA and chairman of Debt.com, has spent more than three decades as a financial counselor coaching Americans to make better decisions with their spending and saving.
Conversations he’s had with clients throughout the past year and a half have made him agree with Solheim’s optimism about the increased retirement savings rate.
“I hear hope for the future in [my clients’] voices – especially when they tell me, ‘Howard, now I get it,” Dvorkin said. “If we can emerge from this pandemic with this profound psychological shift in our thinking about money, we might avoid a lot of pain in the future.”