82% of Americans Say COVID-19 Has Changed Their Retirement Plans
Fidelity Investments released a new report this week that explored Americans’ retirement plans and how they have changed as a result of the pandemic. The Fidelity Investments 2021 State of Retirement Planning Study discovered that 82% of Americans feel that the pandemic has negatively impacted their retirement plans and savings. One-third say it could take two to three years to get back on track because they have either lost their job, derailing their retirement savings efforts, or have borrowed or withdrawn funds from their retirement accounts to pay bills.
However, people have gotten more confident about their ability to retire, potentially because financial struggles during the pandemic caused them to think more seriously about planning for the future and saving for retirement, according to a statement released by Fidelity. The report shows that 79% of survey respondents said they re-evaluated their priorities in the past year.
“This past year has been a roller coaster, but for those Americans with a retirement plan, it should come as a relief to know the fundamentals remain sound,” said Melissa Ridolfi, senior vice president of Retirement and Cash Management at Fidelity Investments.
Retirement Accounts Reach Record Savings Levels
Likewise, Ridolfi noted that retirement savings accounts at Fidelity reached record levels of contributions in the fourth quarter of 2020, especially for female investors.
In a separate press release, Fidelity reported that the average:
- Individual retirement account balance reached $128,000, up 9% from the prior quarter and up 11% from Q4 2019
- 401K balance increased to $121,500, up 11% from Q3 and up 8% from the prior year
- 403(b) balance reached $106,100, up 10% from last quarter and achieving six-figure levels for the first time
Financial Concerns Shift Amidst Economic Recovery
Just as retirement plans may have changed due to the pandemic, financial concerns have shifted as well. Last year around this time, 40% of people were concerned about paying monthly bills. That number dropped to 32% this month. However, this year, people are more concerned about affording healthcare costs in retirement (42%, up from 37%) and maintaining a nest egg for retirement (an increase of only 1%, from 35% to 36%). People are less concerned about paying for their child’s education, with only 41% of respondents citing this as a concern versus 43% last year.
One key to alleviating financial concerns in any area, according to the release, is to establish a financial plan. The survey found that 56% of people with a plan were “very confident they’ll be able to retire when and how they want,” and 43% said they have “greater piece of mine despite market volatility.”
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