Skip to main content

You are here

Advertisement

What’s More Important, Paying Off Debt or Saving for Retirement?

Industry Trends and Research

For a majority of Americans, they apparently would prioritize saving for retirement, according to the results of a new consumer survey. 

In fact, Voya Financial’s survey of more than 1,000 U.S. adults finds that more than half (55%) of individuals said they would prefer to save enough to last through retirement rather than be completely debt-free. And this preference for retirement savings over being debt-free was even more prevalent among individuals currently receiving investment guidance through a financial professional or managed account (67%) and those who are enrolled in a retirement savings plan (65%).

The COVID-19 pandemic has also resulted in more than half (54%) of employed Americans saying they now plan to work in retirement—with many (40%) noting an interest to have a “safety net” to cover unexpected costs and prepare for market volatility as their reasons. “While we know many are having to address financial challenges due to COVID-19, it is a positive to see that the majority see the value in saving for a secure financial future,” notes Charlie Nelson, CEO of Retirement and Employee Benefits for Voya Financial. 

When it comes to generational views on retirement goals, Voya’s findings also show that COVID-19 has had an impact on retirement planning for all savers. The survey found that 59% of currently employed Baby Boomers plan to work in retirement as a result of the pandemic, as well as 60% of Generation X and nearly half (49%) of Millennials. 

The good news, according to Voya, is that this sentiment about retirement is correlating to actions when it comes to saving for the future, particularly for Millennials. The firm notes that its own participant data shows that, among those who have recently changed their savings rate, nearly two-thirds (64%) of Millennials are taking steps to increase their contributions—an increase of 16% over the prior year prior.

“We’re encouraged to see this understanding of needing to take a ‘long-term view’ exists across age groups, in particular those with a longer retirement horizon,” adds Nelson. The CEO further emphasizes that employers should maintain communications to ensure employees are taking full advantage of all their workplace benefit offerings, particularly with open enrollment season about to begin. 

Voya’s survey also found a promising outlook on retirement saving for most individuals as roughly half (50%) reported ownership of a retirement plan, either through an employer-sponsored plan or an IRA. The firm notes that this number increased from its prior wave of research in June (44%).

The survey was conducted through the Ipsos eNation omnibus online platform among 1,005 U.S. adults. Research was conducted in five waves in 2020: March 25–26; April 22–23; May 29–June 1; June 29–30; and July 30–31. 

Advertisement