CHARLOTTE, North Carolina — The coronavirus lockdown has caused an economic crisis that’s taking a toll on many Americans. Not only are their wallets getting thinner but a new survey shows that three in ten Americans have dipped into their retirement savings to help cover their expenses.
MagnifyMoney commissioned a survey of 1,239 Americans who have retirement accounts. Many of the analyses conducted look at responses by the “generation” of the responders. Gen Z is defined as ages 18-23, Millennials are 24-39, Gen X is 40-54, Baby Boomers are 55-74, and the “silent generation” is aged 75+.
The survey shows that 30% of Americans have withdrawn an average of $6,757.20 from their retirement savings from about March 1 through May 1. Another 19% responded that they have not taken money out yet but they plan to do so.
About a third of respondents have tapped into another investment account instead of retirement.
Just over 50% of the people who are making withdrawals from their retirement accounts are doing so to help cover their expenses during the lockdown. A quarter of respondents are withdrawing money after losing their job. Some people are only reaching into their retirement funds to take advantage of new legislation that allows early withdrawals from retirement accounts without any penalties. Fifteen percent of respondents have taken money from their savings in case they lose money in the stock market.
The survey also reveals how people have been spending the retirement money they’re withdrawing. Sixty percent are using their savings pay for groceries, 42% to pay for bills, 31% on rent and mortgage payments and 27% on debt payments. It seems like younger people, millennials and Gen Xers, are more likely to withdraw money to cover their grocery bills while baby boomers are more likely to use it for their bills.
It’s interesting to note that 60% of Americans who have taken money out of their retirement accounts during the pandemic regret doing so. However, 77% of these people intend to replenish the funds they have withdrawn.
Nearly half of the people who normally save for retirement have changed their savings plan during this time. About one in five (21%) have reduced their retirement contributions and another 26% have put their contributions on pause.
Analysis by generation shows that 53% of baby boomers, the generation closest to using their retirement savings, have stopped contributing entirely. Just 13% of Gen X respondents and 17% of millennials are doing the same.
The survey was conducted by Qualtrics between April 28 and May 1, 2020.