Wed, 24 March 2021 | pandemic retirement
As more than one year has passed since the start of the pandemic and with the increasing availability of vaccines, many Americans are focusing on the future, including sizing up their prospects for retirement. The need is real. According to Fidelity Investments’® 2021 State of Retirement Planning Study, more than eight-in-ten Americans (82%) indicate the events of the past year have impacted their retirement plans, with one-third estimating it will take 2-3 years to get back on track, due to such factors as job loss or retirement withdrawals. Encouragingly, the vast majority are still confident they’ll be able to retire when and how they want, and 36% are now even more confident in their retirement plan than before.
As the largest retirement provider in the U.S., Fidelity works with a broad spectrum of savers who have a diverse set of financial needs, challenges and goals, and the study, which focuses on the impact of the past year on retirement plans, points to the positive impact having a retirement plan in place can have on helping people weather the storm. Still, according to the findings, 79% of respondents indicate they re-evaluated their priorities this past year, and while the level of concern has diminished in some areas since the start of the pandemic1, when compared against the pre-pandemic world, people are still more stressed than before on several fronts.
“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. “Although the survey indicates 36% of Americans are more concerned now than at the start of the pandemic on their ability to maintain a nest egg in retirement, at Fidelity, we saw retirement savings accounts reach record levels in the fourth quarter of 2020 and also experienced record levels of planning engagements with clients throughout the year. This is a remarkable validation of the faith so many retirement savers have in their own financial future and their ability to move forward confidently.”
Want to Improve Your Peace of Mind? Plan for Your Future.
For those looking to strengthen their financial future, the study also validates the important role planning can play. According to the findings, simply taking steps to visualize a plan for your retirement can lead to a greater sense of confidence and control. Overall, when it comes to how people are planning for retirement, Americans fall into three categories, with one-third saying they have a plan in place to achieve their goals. 31% have thought about it in great detail.
Here’s where the power of planning comes in: the study offers strong evidence of a transformative effect on one’s financial outlook for those who have started thinking in detail about how to afford the retirement they want.
Across the board, those with the most detailed plan in place to achieve their goals reported experiencing the greatest confidence. However, even the simple act of getting started on a plan can have a positive impact. When asked at what point in the retirement planning process people started feeling more relaxed about their situation, it appears that the experience is highly personal and that there are a number of points that people find emotionally gratifying.
Interestingly, Millennials are slightly more likely than their older counterparts to report having a plan to afford their desired lifestyle in retirement (35%), compared to Gen X-ers (34%) or Boomers (32%), even though Boomers are closest to retirement. Part of this may be attributed to the fact that Millennials are nearly twice as likely to have reported using online tools and calculators than Boomers. These tools can provide the instant gratification of seeing a plan taking shape with just a few clicks, something many have become accustomed to in a digital age.
Additionally, the key considerations, or ingredients for a “plan” differs by generation. For those 30 years from retirement, including most Millennials, having a plan means you’ve determined how much you should be saving on a regular basis and what accounts you should put those savings into based on tax and investing considerations. As people start to get closer to retirement, they need to think and plan for more complex topics.
“For those with a longer time horizon, it may be comforting to know that putting a plan in place may be easier than you think, and will give you the perspective to focus on what you need to do to achieve your goals,” said Ridolfi. “If you are closer to retirement, the good news is, it’s never too late to start planning for your future, regardless of age or income. The study findings clearly show that creating a plan for retirement can lead to a greater sense of confidence and control and ultimately give people a better feeling about where they stand at any age.”
Extra Credit: Consider These Important Retirement Guidelines
To create a strong and achievable plan, it can be helpful to understand where you need to go, and when it comes to retirement, the study uncovers several areas of opportunity when it comes to understanding important retirement rules of thumb. Among them:
About the Fidelity Investments State of Retirement Planning Study
This study presents the findings of a national online survey, consisting of 1,204 adult financial decision makers who were not retired. Respondents had at least one investment account and those over age 34 had at least $100,000 investable assets. The generations are defined as: Baby Boomers (born 1946-64), Gen X (born 1965-80), Millennials (born 1981-96) and Gen Z (born 1997-2012). Interviewing for this CARAVAN® Survey was conducted February 5-12, 2021 by Engine Insights, which is not affiliated with Fidelity Investments. The results of this survey may not be representative of all adults meeting the same criteria as those surveyed for this study.
Source: Fidelity Investments