NEW YORK — The coronavirus crisis has disrupted the economy and the everyday lives of nearly all Americans in some way or another. While many are struggling financially in the now, the downturn may also put a major dent in retirement plans for millions of others, too. A new survey of 1,000 Americans reveals that many believe their plans to retire will have to be pushed back.
The survey, conducted by the financial advisory company MoneyRates results show that the impact of the pandemic will be felt years after the virus is finally under control. Researchers warn that those within 20 years of retiring — adults aged 45 to 64 — could be the worst hit.
A subset of the survey examined 500 people in that age demographic. More than a third (36.4%) admit they expect the coronavirus outbreak will no doubt force them to delay their retirement. Broken down further: 22.6% say they’ll likely be working up to five years longer; 5.2% see retirement pushed back by five to ten years; and 8.6% see themselves stuck in the labor force for at least ten more years.
And while 37% of middle-aged respondents say they don’t know how their investments are performing — perhaps simply because they can’t bear to look — 43.8% of those who do know where their assets stand reported losses of at least 10%.
Making matters worse, an alarming number respondents in this age group have either lost their jobs (14.2%) or their income was reduced (23.2%). To that end, 29.4% of those who have lost income or their job expect to use or have already used some of their retirement savings to make ends meet.
Meanwhile, one in four people surveyed say their retirement investments haven’t been impacted at all. A firm 28.9% also say they absolutely would not touch their nest eggs no matter how bad things get. Under the Coronavirus Aid, Relief and Economic Security Act (CARES Act), the 10% penalty for tapping into retirement savings before reaching retirement is waived for up to $100,000 in withdrawals.
The crisis is putting Americans face-to-face with crucial personal finance decisions to make. To help people navigate this tense financial time, MoneyRates offers six tips for saving money right now:
- Use your stimulus money wisely. It’s better to use the extra money coming in from the government to reduce debt and provide basic services and products for yourself.
- Use credit cards wisely. Avoid overusing your credit cards to make ends meet and digging yourself deeper into debt.
- Don’t panic-sell your stock. The economy is struggling right now, but it will eventually tick up again. Don’t waste good investments in stocks because they’re losing short-term value.
- Contribute to your 401(k) if you can. Even reducing your contributions rather than cutting them off entirely can have immense positive outcomes.
- Use a high-interest savings account. Interest rates are falling, but there are still many savings accounts out there with better rates than others.
- Avoid banking fees. Consider moving your money to an online account that doesn’t charge a maintenance fee like traditional banks.
The survey was conducted in late March and early April on behalf of Money Rates by OP4G.