The pandemic has affected older Americans’ work and financial situations to a large extent, but a new issue brief finds that the retirement expectations of these respondents appear to remain the same despite these impacts.
In investigating the influence of the pandemic on participants’ working and financial situations, the new brief by the Employee Benefit Research Institute (EBRI) finds that COVID-19 did affect the work lives of those age 50 and older.
According to the findings, which are based on the 2020 Health and Retirement Study (HRS), approximately 60% of respondents reported that their work was affected by the pandemic, 55% of them said they had to stop work entirely, 15% of them lost their job permanently and about 20% of them indicated that their work became harder or more risky or dangerous. Regarding financial situations, around one-fifth of the study participants said their income decreased.
Yet, at the same time, older American adults did not adjust their retirement expectations significantly— including the age for planned retirement age and claiming Social Security benefits, despite many respondents indicating that the pandemic had impacted their work and financial situations, EBRI reveals in Staying Optimistic: Older Americans’ Retirement Expectations Remain Uninterrupted Despite COVID-19 Impact.
The HRS is a nationally representative longitudinal survey of more than 37,000 individuals over the age of 50 from 13,000 households in the U.S., conducted by the Institute for Social Research at the University of Michigan. The core HRS survey has been conducted biennially since 1992, and the most recent 2020 wave contains a new COVID-19 section that recorded the participants’ responses to various pandemic-related questions, such as whether and how the pandemic affected the respondents’ work and financial situations.
In the 2020 HRS wave, the average age for “planned” retirement was 66.4, indicating the participants would like to stop working around age 66 on average. The average “expected” stop-working age was 69.2, suggesting that the participants think they may have to work until age 69, though they are planning to retire around age 66, on average.
EBRI observes, however, that there has always been a two- to three-year gap between “planned” and “expected” retirement ages from the 1992 to the 2020 waves. As such, based on the data, the study found no significant differences between the average planned and expected retirement ages for those who reported their work had been affected by COVID versus those who reported it had not.
And while there is generally a natural upward trend for elderly Americans to anticipate a later and later retirement age longitudinally based on the HRS survey from 1992 to 2020, statistical tests demonstrated little relationship between this natural tendency to delay retirement and the pandemic impact.
“The results of this study show that this upward trend remains uninterrupted despite the COVID-19 impact on people’s work and financial situations in 2020,” emphasizes Zhikun Liu, Senior Research Associate at EBRI.
As to the significance of the findings, EBRI notes that employees’ retirement expectations have played important roles in predicting retirement decisions, making policy proposals, and designing financial products and services to help American workers better plan for their future retirement.