After the Covid-19 Pandemic—How It Has Impacted Retirement

Jane and Steve were planning on retiring in five years. Now, a year after the COVID-19 pandemic, those plans have changed. When Steve’s business wasn’t doing well this past year, they couldn’t contribute to their retirement accounts, as they had every month in the past. A year of not being able to contribute and a few other things will certainly set them back.

Have your retirement plans changed because of COVID-19? If so, you have plenty of company. Nearly 40% of those planning to retire say the pandemic has disrupted their intentions, according to the Edward Jones/Age Wave Four Pillars of the New Retirement study.

Before the Pandemic, You Might Have Been Thinking About Retiring Early – Can You Still Do So?

The latest poll from Age Wave and Edward Jones was conducted in March 2021, and included 2,042 adults ages 18 and up. According to this study, about 1 out of every 3 Americans who are planning to retire now say that will happen later due to COVID. The study also found that similar to Jane and Steve in our example, about 14 million Americans have stopped contributing to their retirement accounts every month since the pandemic began.

Of those surveyed, 61% of retirees said they wish they had done a better job planning for retirement financially. Overall, 70% of Americans said the pandemic has been a financial wake-up call that has prompted them to pay more attention to their long-term money plans.

Americans’ Financial Confidence is Bouncing Back

On a positive note, Americans’ financial confidence seems to be bouncing back, with 57% now giving themselves an A or B grade on their finances, up from 50% in May 2020. The Edward Jones survey revealed that “the majority of Americans, particularly Gen Z and Millennials, say the pandemic has “caused them to pay more attention to their long-term financial well-being”—which could serve them well in the years ahead.

Americans of all ages have high hopes for their golden years. Another major survey, conducted by The Society of Actuaries’ Aging and Retirement Strategic Research Program, explored how Americans in different generations have adjusted their approaches to retirement after the pandemic. The survey was conducted online and included 2,017 individuals: 406 Millennials, 405 Gen Xers, 402 Late Boomers, 403 Early Boomers, and 401 Silent Generation (born 1925-1942).

Top findings of this survey include:

  • Impact of COVID-19: 36% of respondents say the pandemic negatively impacted their overall financial situation, while 14% say the impact on their finances was positive.
  • Concerns about retirement savings: The pandemic does not seem to have caused a significant increase in level of concern around retirement risks in general, but many are worried about the impact the pandemic will have on their retirement savings.
  • Worries about climate change impacting retirement are highest among Millennials. They are more likely to believe climate change will impact their health, increase the likelihood of damage to property, and influence where they will live in retirement.
  • Families are helping each other out financially: A third of those surveyed have provided financial support to a family member and 16% have received support in the past year. Younger generations are more likely to find providing this support stressful.
  • Adult children need more financial help: Additionally, 28% are now more concerned their adult children will need financial help. 20% feel the same about their parents needing support.
  • Debt is complicating the finances of Americans: Debt is affecting about half of Millennials and 35% of Gen Xers—higher than the rates of Boomers and the Silent Generation. The stress that stems from having debt is also highest among younger generations.
  • Almost 6 in 10 think they are on track planning for a financially secure retirement, while 22% disagree. Among those who think they are on track, just half base this on their own calculations, research, or best guess. This brings up concerns that some people may think they are in a better position than they are in reality.
  • The retirement savings confidence gap between genders has also grown wider. The study found that 56% of male pre-retirees say they are secure in their retirement savings, compared with 40% of women. While confidence has improved, it still hasn’t reached pre-pandemic levels from January 2020, when 61% of men and 54% of women said they were sure of their retirement savings. The research also found that pre-retirees were more negatively impacted by the pandemic compared with retirees, 44% versus 22%, respectively.
  • Health-care costs, including long-term care, are still ranked as the No. 1 retirement concern for pre-retirees, with 66% in both May 2020 and March 2021.

Moving Past the COVID-19 Pandemic

And as we make progress in moving past the COVID-19 pandemic, Americans are working towards getting back on track towards retirement. These are two major areas that should be a focus:

Retirement savings – It’s generally considered important to contribute as much as you can afford to your tax-advantaged retirement accounts, such as your Roth IRA, traditional IRA, and your 401(k) or another employer-sponsored plan. At a minimum, put in enough to earn your employer’s matching contribution, if one is offered.

Long-term care – Individuals turning 65 have about a 70% chance of eventually needing some type of long-term care, such as a nursing home stay or the assistance of a home health aide, according to the U.S. Department of Health and Human Services. And these services are quite expensive – the average annual cost for nursing home care is more than $120,000 – 150,000 a year in the DC Metro Area. Medicare does not cover long-term care, so, to avoid depleting your savings and investments (and possibly subjecting your grown children to a huge financial burden), it’s important to plan ahead for long-term care. A financial advisor who is also a Certified Elder Law Attorney, such as Evan Farr, can help you choose a plan that’s appropriate for your needs.

Planning for Retirement

In both surveys that were mentioned, the majority of retirees wish they had done a better job planning for both the financial and the non-financial aspects of retirement. Many Americans are vastly unprepared for a retirement that is both purposeful and financially secure. Americans are realizing, however, that they need help and they’re now seeking more comprehensive retirement planning

If you’re worried about your retirement after the COVID-19 pandemic, the best thing you can do is to plan! Whether your retirement is coming up soon or is many years away, it is important to protect your hard work and your golden years with effective retirement planning and long-term care financial planning.

Besides being a Certified Elder Law Attorney, I am also an experienced retirement planning advisor and long-term care financial advisor through my affiliation with Protection Point Advisors.

Retirement planners, such as myself, generally work with people ages 55 and older, who are within 10-20 years or so of their desired retirement age. To get started on retirement planning, estate planning, or long-term care planning, please contact us to make an appointment for an initial consultation.

Retirement Planning Fairfax: 703-691-1888
Retirement Planning Fredericksburg: 540-479-1435
Retirement Planning Rockville: 301-519-8041
Retirement Planning DC: 202-587-2797
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About Evan H Farr, CELA, CAP

Evan H. Farr is a 4-time Best-Selling author in the field of Elder Law and Estate Planning. In addition to being one of approximately 500 Certified Elder Law Attorneys in the Country, Evan is one of approximately 100 members of the Council of Advanced Practitioners of the National Academy of Elder Law Attorneys and is a Charter Member of the Academy of Special Needs Planners.

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