The COVID-19 pandemic may end up being the catalyst that some Americans needed to rethink their relationship with money and put more toward saving for retirement.
Unable to control the virus, the economy or the political environment, Americans are narrowing their focus to their immediate locus of control: the financial stability of their own households. A new survey from Empower Retirement and Personal Capital finds that of the more than 2,000 adults surveyed, 83% said they want to minimize worrying about their finances this year, mainly through increased savings.
When asked about their financial goals, “saving for retirement” and “paying off personal debt” topped their lists. The survey results and analysis are detailed in the white paper, “In Uncharted Waters, Savers Keep Both Hands on the Tiller.” One caveat: The survey was focused on retirees and people who remained employed during the pandemic, and do not reflect those who are out of work.
Still, fully 70% of respondents say they are putting more money into savings. This data also could in part reflect the fact that people are spending less on vacations, restaurants and entertainment, the report notes.
Nevertheless, more money is being saved and invested—especially among some segments of the population. For example, parents (80%), Hispanic workers (81%), Black workers (75%) and Asian workers (78%) are more focused on saving than other groups.
More Advice Please
Uncertainty about the economy, even as a Coronavirus vaccine rolls out, has also sparked more interest in expert financial advice. According to the findings:
- 52% of respondents said they will seek more guidance when it comes to their financial strategies;
- 33% said they are more likely to work with financial professionals, up from 24% at the onset of the pandemic;
- 41% said they plan to spend less money on nonessential items; and
- 38% plan to save more of each paycheck they receive.
Data from Empower platform intelligence shows that only a small percentage of participants took advantage of the CARES Act’s COVID-related withdrawals. On the Empower platform, just 4.4% of participants made withdrawals, totaling $8.2 billion. The average distribution was $16,000, well below the allowable maximum of $100,000.
What’s more, the data shows that more Americans increased their savings rates than decreased them during the second half of 2020. That held for every generation, from Gen Z (the youngest of today’s workers) to the Silent Generation (born 1928-1945).
Disproportionate Impact
The report further suggests, however, that women have been disproportionately affected by the pandemic. Among the reasons are that women are more likely to be the primary caregivers for children stuck at home, making it harder to work; and the heavy concentration of women in health care and other frontline service jobs that expose them to the Coronavirus as well as to COVID-related business closures.
Through the lens of personal finance, the survey found wide gaps in the confidence of men and women:
- Just 16% of women say they are now more optimistic about the stock market than they were last year, compared with 26% of men.
- Fewer women feel optimistic or in charge of their finances (33% versus 44% of men).
- More women report they “barely have their head above water” (31% as opposed to 19% of men).
- Women are less confident in their ability to build emergency savings (55% compared with 69% of men).
- Just 62% of working women are confident in their job security, compared with 72% of men.
- Only 54% of women are confident they can retire when they want, compared with 67% of men.
“This past year has been difficult for so many Americans. Those faced with financial hardships found themselves changing or adjusting their financial plans,” said Stephen Jenks, Empower Retirement Chief Marketing Officer. “But this tough year also has inspired some workers and retirees to reexamine their financial goals and seek expert advice on the best strategies to help them achieve a secure retirement.”
“So many families suffered loss, hundreds of thousands of small businesses closed and millions of jobs vanished. For others, working remotely has had positive aspects,” adds Craig Birk, Chief Investment Officer at Personal Capital. “The good news is, for many, it’s not too late to turn things around. Working and retired Americans are saying they want to save early, often and aggressively.”
The survey was conducted by the Harris Poll for Empower Retirement and Personal Capital from Nov. 25 to Dec. 11, 2020, among 2,008 U.S. residents who were at least 18 years old and who were employed or fully retired.
