Recent research suggests that, with all its pain and disruptions, COVID-19 didn’t do much to upend people’s retirement plans or confidence. This week we asked readers what they have seen and heard.
In investigating the influence of the pandemic on participants’ working and financial situations, a 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.
Participant Perspectives
We started this week’s Reader Radar by asking whether, generally speaking, the participants that readers work with changed their plans about retirement timing. Perhaps not surprisingly, it was a bit of a mixed bag, but for the most part, not so much:
45%—Some yes, mostly no.
34%—No.
13%—They don't seem to have given it much thought.
5%—Some no, mostly yes.
3%—Yes, but not of their choosing.
It all depends on the participants timeline to retirement.
Just haven't seen it in over 15 plans in our quarterly meetings.
Management level 60+ year old’s accelerated their timeline given strong market performance and high balances in their retirement accounts... interestingly enough, those are the same folks who are most concerned now that markets are down substantially this year.
I have not noticed any real change in contributions from participants in the plans we service.
Short-term Financial Asset inflation has injected false confidence on account balances and their sustainability. We are seeing the outcome of this now and many may have to return to part-time work.
Participants seem to be more focused on family than career. However, some places of work are being more flexible which could ultimately extend retirement.
They are certainly aware and unhappy that their market values have gone down, but I haven't heard anything that it's caused them to change retirement timing.
Participant Communications
And then we shifted to—well, education. We asked readers if the impact of COVID (health, employment, markets, inflation, etc.) led to a shift in how they talk about retirement with plan sponsors and participants? And the responses here—were definitely “mixed.”
26%—No, but inflation, now that's a whole other thing.
18%—Not really.
16%—Absolutely.
13%—A bit, but not much.
13%—Depends on who I'm talking to, but for those most impacted, definitely.
13%—It's really given a new emphasis to financial wellness.
Still try to emphasize and press the subject of Financial Wellness. Many plan sponsors don’t understand the qualitative aspects it creates for their company—they are fixated on quantitative.
Even for the more "sophisticated" investors, many participants almost seem stunned that their 401(k) balances could actually go down. With the exception of 2018, nobody has really seen a RED PRR on their accounts. It's creating a great opportunity to reinforce having an investment "strategy" and that strategy should not deviate just because the markets are down for the first time in what seems like forever. Also, we've always referenced and tried to illustrate the impact of inflation...now we have real life examples.
I think COVID really helped put perspective on health and how important it is to plan for unforeseen events.
Everyone seems to be realizing they will need more than originally planned, inflation increasing so rapidly was a reminder that many things are out of our control.
YOUR Retirement Plans?
Then we shifted to a more personal perspective—and asked readers if the impact of COVID had produced a shift in THEIR plans about retirement timing? Here the answers were—well, not so “mixed”:
63%—No.
24%—Still figuring that out.
8%—Yes, pushing it forward some.
5%—Yes, pushing it back some.
Other Comments
Most companies I work with, and subsequently employees, are mad how they were shut down and limited in things they could do. Maybe because it's because I'm up here in CT and people see how states like Florida and Texas remained open. But there is a great deal of frustration on how CT handled Covid.
Enough Covid surveys. It happened, was real, it sucked, but most of us have moved on and are dealing with much more immediate challenges. These topics feel dated and disconnected from my perspective.
Delayed retirement and working remote will allow many to work longer.
Working from home became more common place and some people will work longer until retiring than initially expected since it is less stressful.
We just haven't seen any impact, here in the SE.
Good to see a sense of normal return—trains are packed on the morning commute, the city streets in Chicago are busy again downtown.
Policy is impactful, no matter what the justification is, fiscal and monetary policy have dramatic influence on outcomes.
I will be glad to have COVID in the rear-view window.
Inflation and the market adjustment have more influence on peoples thinking regarding the timing of retirement.
Thanks to everyone who participated in this (and every) week’s NAPA-Net Reader Radar Poll!
