The troubled economic terrain due to COVID-19 has shifted retirement goals for many.
6 Ways the Coronavirus Crisis Affects Americans’ Retirement Plans
For decades, you scrimped and saved, maybe contributing to a 401(k) or other retirement account so you could kick back one day and enjoy a comfortable retirement. Then COVID-19 came along, threatening to throw your retirement plan off course.
Maybe you worry that the economic impacts of the coronavirus pandemic will force you to postpone retirement or delay claiming social security retirement benefits. Perhaps you’re even afraid to look at the balance in your retirement account due to the down market.
If so, you’re got plenty of nervous company. Click or swipe to find out how the COVID-19 crisis has altered – at least temporarily – Americans’ retirement plans.
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1. Worry over meeting retirement goals
The economic impacts of the COVID-19 crisis cause many Americans to worry about meeting retirement goals, according to a survey conducted by financial products site LendEDU. In fact, 72% of those surveyed said they worry that economic fallout from coronavirus will “seriously damage” their retirement savings and plans.
2. Concerns over retirement savings
More than half (56%) of Americans are more concerned about their retirement plans today than they were in 2019, according to a recent retirement confidence survey conducted by financial services company SimplyWise. And the closer you are to retirement, the greater the concern.
Around 69% of people in their 50s are more concerned about their retirement plans today than they were a year ago due to the economic impact of the coronavirus pandemic, and 49% worry they will outlive retirement savings, according to the survey.
3. Shifts in retirement contributions
In the weeks after the start of the coronavirus pandemic in the U.S., more than half (55%) of people surveyed said they plan to change their retirement fund contributions, according to a survey by Massachusetts Mutual Life Insurance Company.
Of those who plan to change retirement fund contributions, 54% say they will contribute less to allow more cash on hand, 22% plan to increase contributions to benefit from a down market and 24% expect to contribute the same amount but change risk exposure.
4. Delays with claiming social security
Nearly one in five (23%) of respondents in the SimplyWise survey said they will wait longer to claim social security benefits as a result of the COVID-19 crisis. By delaying claiming social security retirement benefits past the eligibility age of 62 or after your full retirement age of 66 or 67, you can increase the monthly amount you will receive.
For instance, let’s say your social security full retirement age is 66 with a monthly benefit of $1,000. If you start claiming benefits at 62, you’ll receive 25% less, about $750 a month. Using that same example, if you wait until age 67 to claim social security retirement benefits, your monthly benefit would increase by 8% to $1,080. Wait to claim at age 68 and the monthly benefit would be $1,160. Hold out until age 70 and the benefit increases to $1,320 a month.
Find out: How to Save for Retirement
5. Raids on retirement savings
One in ten people surveyed plan to dip into retirement savings to survive the economic crisis, according to SimplyWise. Around 20% of respondents believe they will need to take a withdrawal from their 401(k), including one in three who lost their job.
A recent survey by personal finance site Bankrate found that around 27% of working or recently unemployed adults tapped into (14%) or plan to use retirement funds (13%) as an immediate source of income during the coronavirus crisis.
6. Attention on survival more than retirement
Around 46% of Americans surveyed by Fidelity Investments said they’re feeling more stressed than usual about whether they have enough saved to retire.
Yet almost half (49%) of people surveyed said that due to the coronavirus pandemic, they don’t have time to address their investments and retirement savings because of increased work and home responsibilities.
Published by Debt.com, LLC