Despite Pandemic, Workers Remain Confident About Retirement

Plus, confidence about Medicare and Social Security benefits reaches an all-time high.


In spite of the COVID-19 pandemic creating tremendous uncertainty in the labor and financial markets, the 2021 “Retirement Confidence Survey” conducted by the Employee Benefit Research Institute (EBRI) and Greenwald Research found that 80% of retirees are confident in their ability to live comfortably throughout retirement, up from the 76% of retirees who held that view last year.

Meanwhile, 72% of workers are confident in their ability to retire comfortably, up 3 percentage points from last year, according to the survey.

“Even with changes in the labor market, workers’ confidence in their ability to live comfortably in retirement remains high overall,” says Craig Copeland, EBRI senior research associate. “However, while resilience may be the watchword for 2021, three in 10 workers say the pandemic has negatively impacted their ability to save for retirement due to reduced hours, income or job changes. The group that was most likely to have their ability to save impacted were those more likely to have low confidence historically, such as those who are low income, not married and having a problem with debt.”

Eighteen percent of workers said their hours and/or pay have been reduced since February 1, 2020. Ten percent said they had been furloughed or temporarily laid off. In total, 39% of workers reported that their household experienced some type of negative job or income change since February 1, 2020.

On the flip side, 21% of workers reported having some type of positive change in work in the same time frame.

The workers who reported a negative change in work were more likely to say that the COVID-19 pandemic reduced their confidence in having enough money to live comfortably throughout their retirement years. Half of workers who experienced a negative change said they were either somewhat or significantly less confident as a result of COVID-19, compared with just 24% of those who did not have a negative change.

Retirees continue to report their lifestyle and expenses are as expected or better than they expected. Eighty percent of retirees say their overall lifestyle—including traveling, spending time with family or volunteering—is as expected or better, including nearly three in 10 saying their retirement lifestyle is better than they expected.

EBRI and Greenwald say these results are virtually identical to those measured pre-pandemic.

Sixty percent of retirees say their overall expenses and spending in retirement are at the levels they expected, but 26% say they are higher.

“About seven in 10 retirees report that their confidence in living comfortably throughout retirement was unchanged by the pandemic,” says Lisa Greenwald, chief executive officer of Greenwald Research. “Twenty-three percent feel less confident, and 5% feel more confident. Retirees’ top priorities for discretionary spending in retirement continue to be travel and spending on leisure or entertainment. Many of these activities were curtailed during the pandemic, perhaps leading to lower spending. That’s one reason why we may be seeing these results. Another is the adaptability and resilience of retirees demonstrated throughout the history [of our survey]. The survey shows retirees prioritize asset preservation and do not like the idea of spending down.”

Retirees’ confidence in Social Security—a major source of income for more than 60% of retirees—continued uninterrupted throughout the pandemic, Greenwald adds. Further, confidence among retirees (72%) and workers (53%) that Social Security will continue to provide benefits equal to those today reached an all-time high since the survey was first conducted 31 years ago, she says. As to how Medicare will fare, 75% of retirees and nearly 60% of workers also believe that will hold steady, another all-time high.

Only 22% of workers adjusted the age at which they plan to retire because of the pandemic and its economic impact; of this group, 17% plan to retire later.

Three-quarters of workers expect to work in retirement, even though only 30% of retirees say they have been able to find work.

More than 80% of workers who are offered a workplace retirement plan are satisfied with it, and 80% are satisfied with the investment options available. However, 30% said they would like more investment options, up from 22% in 2020. Twenty-five percent of workers would like to be offered investment options suitable for post-retirement, and 75% said they would put at least a portion of their savings in a product that would provide guaranteed monthly income for life.

In the past year, 30% of workers made changes to their plan, and, of this group, 60% increased their deferral rate, while 25% reduced or stopped contributions.

“Showing further resilience, just one in 10 workers who have saved for retirement say they have taken a loan, hardship distribution or early withdrawal from their workplace retirement plan in the past 12 months,” Copeland says. “The most likely reasons were for paying off credit card debt or for a COVID-related need.”

EBRI and Greenwald conducted the online survey of 3,017 Americans 25 and older—1,507 workers and 1,510 retirees—from January 5 through January 25.