Covid-19 Pandemic was hard on a lot of people places and things; but surprisingly it did not stop interest in retirement savings. Financial stress is an issue for many Americans. Inflation and rising healthcare costs top the list of stressors. And although the Covid-19 pandemic created money challenges for many American households, especially at its peak, it did not significantly impact their retirement savings plans.
Many employees are still saving for the future, and they’re motivated to do so. Boomers are the most confident that they’ll achieve their retirement goals; Millennials are the least. This is according to data cited in an infographic featured in a recent BenefitsPro article. Slightly more than two-thirds (67%) of Americans said there was no change to their retirement savings plans due to Covid-19. Still, 17% saved less for retirement, while 16% saved more. When it comes to savings by gender, a greater percentage of men set aside more money for retirement (59%) than women (41%).
Savings rates also rose in 2021; whether voluntarily or as a result of automatic increases put in place by their employer. 42% of plan participants increased their deferral rates last year. Americans also implemented a variety of savings strategies in the last two years, including:
- Staying invested in the stock market (43%)
- Paying down debt (31%)
- Redirecting money to savings (20%)
- Building up their retirement nest egg (18%)
- Revising or setting up a budget (17%)
In addition, Americans report wanting to be better prepared for retirement:
- 66% say beginning to save or increasing their savings is now a high priority;
- 59% say retirement planning is now a high priority; and
- 24% say retirement planning has become their highest priority.
Moreover, Americans appear to be relatively optimistic post-Covid, despite lingering financial stressors. 65% say they put the pandemic behind them and started focusing on the future.
Nonetheless, retirement confidence still varies by age group. When asked “Are you somewhat confident/very confident you’ll meet your long-term financial goals?”, most answered affirmatively, but the responses were mixed:
- Boomers (90%)
- Next Gen ages 18-35 (84%)
- Gen X (79%)
- Older Millennials ages 36-14 (78%)
Inflation and economic uncertainty are still causing Americans financial stress; The Covid-19 Pandemic hangover is starting to fade into the rearview, and is no longer as the financial challenge it once was. The idea that workers are still saving for retirement and are making planning for it an even higher priority is encouraging. Still, employers should continue to be diligent in their efforts to encourage retirement plan participation. Focusing on financial wellness should keep the trends moving in a positive direction, especially as a potential recession looms on the horizon.
