COVID-19 Pandemic Has Limited Impact on Retirement Savings

The COVID-19 pandemic created significant and serious challenges for Atlanta individuals, families, businesses, and nonprofit organizations. The forced business closures, stay-at-home orders, and social distancing guidelines meant an almost complete disruption to daily activities. While necessary to prevent widespread infection, it also caused businesses to fail, unemployment to skyrocket, and left many without work. Despite these unique conditions, it appears the pandemic had little impact on retirement savings. According to the 2021 Retirement Confidence Survey, it was found that more than 66% of respondents indicated the pandemic has not negatively impacted retirement savings.  This is especially surprising giving the high unemployment numbers. To help clients, prospects, and others, learn more about the current state of retirement planning, Wilson Lewis has provided a summary of the key details below.

About the Survey

The survey was conducted online between January 5^th and January 25, 2021, and includes a diverse group of workers and retirees of over 3,017 people aged 25 and older. Respondents included 1,507 workers and 1,510 retirees. The data was weighted by age, gender, education, household income, and race/ethnicity.

Key Survey Findings

• COVID-19 Impact on Retirement Savings – Since the start of the pandemic, individuals and families needed to make several changes to cope with the new economic challenges. The survey inquired on whether the pandemic has impacted workers’ ability to save. It was found that 51% reported no major impact, 18% minor negative impact, 14% major negative impact, while only 17% reported a positive impact of any kind.
• Debt Management – The opportunity cost of servicing debt is one that impacts both workers and retirees and may mean less can be saved for retirement needs. It was found amongst workers that 55% do not believe debt is impacting savings, 26% somewhat agree and 20% strongly agree. Amongst retirees, 77% indicated debt is not impacting the ability to live comfortably in retirement, 15% somewhat agreed, and 8% strongly agree. It appears that debt is a bigger issue for workers diverting funds that could otherwise be used for saving.
• Retirement Plan Improvements – Since so many workers rely on an employer-sponsored retirement plan, the survey wanted to understand how plan sponsors could add value for participants. According to the survey, it was found that 33% expressed interest in better explanations on how much income current savings will produce, 31% more fund options, 25% more personalized education, 14% more options for post-retirement, and 9% wanted fewer investment options.
• Information Source for Retirement Planning – Essential decision-making about when to start retirement planning, tools to use, and best strategies are all based on how people receive information. For this reason, the survey wanted to understand the top information sources on retirement planning. It was found that 35% of respondents receive information from family and friends, 35% online research, 27% professional financial advisor, 22% information provided by the employer, 16% financial experts in the media, 6% church or religious locations, 6% libraries or community centers and 17% indicated other.
• Professional Advice – Given the complexities of navigating retirement planning, the survey also wanted to understand how often financial advisors are retained to drive the process. It was discovered among working respondents that 33% are working with a financial advisor, while amongst retirees only 36% work with an advisor. In other words, a majority of respondents do not receive professional advice.

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It appears the COVID-19 pandemic did not have the adverse impact on retirement savings that was widely expected. Concurrently, the relationship between debt and retirement savings also yielded interesting results. As the economy continues to progress towards recovery, it will be interesting to see how retirement savings change in the coming months. If you have questions about the information outlined above or need assistance with plan selection, set-up, or options for your Atlanta business, Wilson Lewis can help. For additional information call us at 770-476-1004 or click here to contact us. We look forward to speaking with you soon.