Just over one in five workers (21%) indicate that their confidence in their ability to retire comfortably has declined in light of the coronavirus pandemic, the Transamerica Center for Retirement Studies reported in a survey. Only 27% are very confident they will be able to fully retire with a comfortable lifestyle.
“Before the pandemic, the retirement prospects for many workers was iffy, at best,” says Catherine Collinson, CEO and president of the Transamerica Institute and the Transamerica Center for Retirement Studies. “The pandemic has exacerbated that situation. Millions of workers have experienced negative impacts to their employment, ranging from pay cuts and furloughs to job loss. Some workers have even dipped into their retirement accounts to make ends meet. It will take years for many workers to financially recover—and some may never recover. Help from policymakers is needed to strengthen the U.S. retirement system.”
Specifically, Collinson is calling on policymakers to enact legislation and implement reforms to “ensure the sustainability of government benefit programs, encourage employers to offer benefits to their employees and help prepare workers for long, healthy and productive lives.”
When workers are asked what President-elect Joe Biden and Congress should prioritize, their most often cited responses involve strengthening safety nets and improving health care, including addressing Social Security’s shortfalls (49%); followed by making out-of-pocket health care expenses and prescription drugs more affordable (47%); addressing Medicare’s funding shortfalls (42%); innovating solutions to make long-term case services and support more affordable (37%); expanding access to employer-sponsored retirement plans, individual retirement accounts (IRAs) and other savings programs (36%); implementing financial literacy curriculum in schools (34%); increasing access to affordable housing (34%); expanding the saver’s credit (32%); creating incentives for individuals to obtain ongoing training and education (32%); and allowing employers to match employees’ student loan payments as a contribution in their retirement accounts (29%).
“Workers share many retirement-related risks,” Collinson says. “However, by increasing an understanding of the differences across demographic segments, we can identify solutions to help those in greatest need.”
The survey also found that 52% of workers have experienced one or more negative impacts to their employment, including job loss, furloughs, reduced hours, reduced pay and/or retiring early. LGBTQ workers are among the most impacted, with 65% having experienced one or more negative impacts to their employment, compared with only 50% of non-LBGTQ workers.
As a result of the pandemic, 33% of all workers have taken out a loan or withdrawal from their qualified retirement account or are planning to do so. Those who are most likely to dip into their retirement account are LGBTQ people (59%), people living in urban areas (50%), Millennials (43%) and men (42%).
Thirty-four present of all workers say paying off credit card debt is a financial priority, and this rises to 45% of Generation X.
Seventy-five percent are saving for retirement through their current employer’s retirement plan, a former employer’s plan and/or outside of work. This is true for 86% of full-time workers, but drops to 67% of part-time workers.
Nearly half (47%) of workers say saving for retirement is a priority. This rises to 63% of Baby Boomers, 59% of college graduates, 55% of full-time workers and 55% of suburban workers.
However, only 27% of workers have a written financial strategy for retirement. This rises to 41% for LGBTQ workers, 40% for college graduates and 36% of urban workers.
“From a societal level to individual households, the pandemic has disrupted nearly every aspect of our lives and laid bare weaknesses in our retirement system,” Collinson says. “As we navigate the pandemic with an eye toward the future, policymakers, the industry, employers and individuals have a tremendous opportunity to work together and create a stronger, sustainable and inclusive system in which everyone has the ability to live, work and retire with dignity.”
The findings are based on a survey of 1,173 workers, conducted in October.