As a result of the COVID-19 outbreak, the disease caused by the coronavirus, U.S. workers are facing another economic challenge: retirement.
According to “Retirement Security: A Compendium of Findings About U.S. Workers,” a new survey report released by Transamerica Center for Retirement Studies (TCRS) found one in five U.S. workers (21 percent) indicate their confidence in the ability to retire comfortably has declined in light of the pandemic – and only 27 percent are confident in a comfortable retirement.
About 6,500 workers participated in the survey.
“Before the pandemic, the retirement prospects for many workers was iffy at best,” said Catherine Collinson, president and CEO of Transamerica Institute and TCRS. “The pandemic has exacerbated that situation.”
“Millions of workers have experienced negative impacts to their employment, ranging from pay cuts and furloughs to job loss. Some workers have even dipped into their retirement accounts to make ends meet.
“It will take years for many workers to financially recover – and some may never recover. Help from policymakers is needed to strengthen the U.S. retirement system.”
When asked of their expectations of the incoming Biden administration:
*49 percent of the workers said safety nets, especially health care should be addressed, and the anticipated Social Security funding shortfall should be eliminated;
*47 percent said out-of-pocket healthcare expenses and prescription drugs should be more affordable;
*42 percent said Medicare expected funding shortfalls should be addressed; and
*37 percent said innovations for affordable long-term caref should be established.
“Policymakers can pave the way for improving retirement security by enacting legislation and implementing reforms that can ensure the sustainability of government benefit programs, encourage employers to offer benefits to their employees, and help prepare workers for long, healthy, and productive lives,” Collinson said.
Other priorities cited by workers include expanding access to employer-sponsored retirement plans, IRAs, and other savings programs, implementing financial literacy curriculum in schools, increasing access to affordable housing, expanding the Saver’s Credit, creating incentives for individuals to obtain ongoing training and education, and allowing employers to match employees’ student loan payments as a contribution in their retirement accounts.
“Workers share many retirement-related risks; however, by increasing an understanding of the differences across demographic segments, we can identify solutions to help those in greatest need,” Collinson added.
Other key findings from the survey include: Approximately half of workers (52 percent) have experienced one or more negative impacts to their employment including job loss, furloughs, reduced hours, reduced pay and forced retirement.
LGBTQ workers are among the most impacted. Sixty-five percent of LTBTQ workers have experienced one or more negative impacts to their employment, compared with only 50 percent of non-LGBTQ workers.
As a result of the pandemic, 33 percent of all workers have already and/or plan to take a loan and/or withdrawal from their qualified retirement account such as a 401(k), 403(b), or similar plan or IRA.
LGBTQ, urban, millennials, and men are among the workers more likely to be dipping into their retirement savings says TCRS.
Credit card debt may pose a threat to retirement security for many, especially members of Generation X, says the report. Thirty-four percent of all workers cite paying off credit card debt as a financial priority, including 45 percent of Generation X workers.
Moreover, if their finances have been or were to be negatively impacted by the pandemic, 35 percent of Generation X workers indicate they would rely on credit cards.
Only 27 percent of workers have a written financial strategy for retirement, according to the report, which also finds legal documentation is also lacking.
Only 22 percent of workers have a medical power of attorney or proxy, which is more important now than ever amid the pandemic says the report.
“From a societal level to individual households, the pandemic has disrupted nearly every aspect of our lives and laid bare weaknesses in our retirement system,” Collinson said.
“As we navigate the pandemic with an eye toward the future, policymakers, industry, employers, and individuals have a tremendous opportunity to work together and create a stronger, sustainable, and inclusive system in which everyone has the ability to live, work, and retire with dignity.”