August 19, 2021

Survey Reveals the Impact of COVID on Retirement Savings

The COVID-19 pandemic created significant financial challenges for many businesses, individuals, and families. In January 2020, the unemployment rate in Atlanta was 3.2% but by June it had more than doubled to 7.6%.  These numbers reflect how the fear of virus transmission and new government orders conspired to create adverse circumstances. While companies were busy adapting operations to find new ways to serve customers, individuals and families were re-assessing financial priorities to weather the storm. In some cases, they had to rely on retirement plan savings by taking out plan loans or early distributions. Despite this, it is surprising to learn the pandemic did not have a significant impact on retirement savings. According to the EBRI 2021 Retirement Confidence Survey, only 31% of respondents made changes to retirement plan contributions during the pandemic. In addition, it was also found that only 28% relied on retirement savings to help manage expenses during the same period. The survey also uncovered other insights on retirement planning. To help clients, prospects, and others, Wilson Lewis has provided a summary of the key details below.

About the Survey

The survey was conducted online between January 5^th and January 25^th, 2021, and includes responses from 3,017 participants. This includes 1,507 individuals currently employed and 1,510 retirees with an oversample of roughly 500 Black Americans and Hispanic Americans. All respondents were ages 25 or older.

Essential Survey Findings

• Retirement Savings – The survey wanted to understand how the pandemic impacted a worker’s ability to save due to reduced hours, income, or job changes. It was determined that 14% experienced a major negative impact, 18% minor negative impact, 51% no impact, 8% experienced a positive impact while 9% indicated not applicable. It is surprising to discover that 59% experienced a positive to no impact in savings due to the pandemic.
• Retirement Planning Information – The survey also wanted to understand where most receive information on retirement savings and planning. It was found that 35% rely on family and friends, 35% online resources, 27% personal financial advisors, 22% employer-provided information, 17% online advisors, 16% financial experts in the media, 6% church or religious centers, and 4% libraries or community centers. It appears from the data that most are not relying on financial advisors for directions.
• Valuable Plan Improvements – There was also interest in understanding what would be the most valuable improvements to the workplace retirement plan. According to the survey, 33% indicated better explanation of how much income participant savings will generate in retirement, 31% more investment options, 30% better explanations if savings are on track, 25% more individualized education, 25% more only educational tools, 24% more post-retirement investment options and 17% responded with none of the above.
• Retirement Income Source – Given changes in retirement savings, the survey wanted to understand the expected source of income in retirement. It was found that 87% of respondents indicated social security, 83% workplace retirement plan, 76% personal retirement savings, 73% individual retirement account (IRA), 68% work for pay, 50% traditional pension plan, and 38% financial support from family or friends.
• Retirement Transition – The transition to retirement is different for each individual with some able to stop working at a certain date, while others slowly move to full retirement. The survey wanted to understand how workers are planning to make the transition. It was discovered that 51% of respondents expect a gradual transition leading to a full-time stop, 38% expect a full-time stop and 9% are unsure how they will make the transition into retirement.

Contact Us

The results provide important details which employers and plan sponsors can use to elevate the value of their company-sponsored retirement plan. While COVID did not cause a significant reduction in retirement savings, there are important “value-added” options that can be provided to help participants on the savings journey. If you have questions about the information outlined above or need assistance with a retirement plan issue, Wilson Lewis can help. For additional information call us at 770-476-1004 or click here to contact us. We look forward to speaking with you soon.