The COVID-19 pandemic has roiled the economy and devastated many Americans’ savings, and it appears there is no end in sight. Amid the current surge in COVID-19 cases across the country, states have revived restrictions and stay-at home directives. With the unemployment rate remaining above 10%, the rise in cases and updated policies threaten to make the coronavirus-related layoffs and furloughs permanent.
In a country where most people live paycheck to paycheck, this could be devastating. Most Americans lack the savings to last them even three months. Of course, that savings gap is all the more dramatic when it comes to saving for retirement. And with the havoc the pandemic has wrought, that savings gap seems likely to worsen.
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COVID-19’s lasting mark on Social Security
The record unemployment rates since March of this year mean that the Social Security fund (which depends on payroll taxes) is taking the hit. More, the CARES Act allows companies to delay Social Security. And while this doesn’t affect current beneficiaries, it highlights the pandemic’s impact on the already increasing Social Security funding deficit.
As Federal Reserve vice chair Randal Quarles recently said: “There’s probably never been more uncertainty.” So it’s unsurprising that Americans are more worried than ever about their future and what retirement today will look like.
According to the July 2020 SimplyWise Retirement Confidence Index, here are the things Americans are most concerned about when it comes to retirement:
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1. Retirement concerns in general grow
Of those surveyed, 62% of respondents said they are more concerned about retirement today compared to a year ago (up from 56% in the May).
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2. There won’t be enough retirement savings
Half of Americans now believe they will outlive their retirement savings.
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3. Most haven’t saved even close to enough for retirement
Of those surveyed, 1-in-5 respondents say they could not live more than two weeks off their savings.
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4. No retirement at all
Working in retirement is now a given according to 72% of respondents who now say they plan to work in retirement (up from 67% in May).
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5. Not earning enough
Only 58% of those in the workforce are making what they were making prior to COVID-19 (67% for white Americans, 50% for Hispanic Americans, 45% for Black Americans).
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6. Long-term effects of unemployment
One-in-five Americans in their 60s have lost their job or been furloughed due to COVID-19.
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7. Dipping into retirement
Of those surveyed, 24% are now planning to tap their 401(k) to make ends meet, including 41% of those laid off due to COVID-19.
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8. No emergency fund
Coming up with $500 cash today (without selling something or taking a loan) would be impossible for 63% of Black Americans surveyed. Just 35% of white Americans surveyed said the same.
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9. Not enough short-term savings
Of those surveyed, 48% of Black Americans and 43% of Hispanic Americans say they could survive just one month or less on their current savings. Just 33% of white Americans have the same financial concern.
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10. Another round of stimulus is needed.
Half of all Americans surveyed say another stimulus check is very important to their finances.
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11. A recession is looming
Of all Americans surveyed, 72% (83% of Democrats,. 60% of Republicans) say a recession will continue into the next year.
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Takeaways
Since the start of the pandemic, so much has changed about the way we live our lives, and indeed, what it means to live in this new reality. The human toll from the coronavirus continues to climb. The government is working on policies to ease the burden on citizens and businesses impacted by the virus. But the new rules and regulations can feel confusing to navigate.
As things change so much day to day right now, it’s no surprise that Americans are struggling to think about and save for any kind of future today. Yet the insecurity is why it is more important than ever to put aside what you can and educate yourself on your options for saving and retirement today.
Americans who are not yet retired but whose finances have been impacted by the pandemic can use this time to review their expenses. Determine how much cash will be needed in retirement, and make any necessary adjustments to savings and portfolio asset allocations. For those who are eligible but not yet on Social Security, this is a good time to consider how to maximize your benefits. You can use a Social Security calculator and checklist to determine any earned, spousal or survivor benefits for which you’re eligible.
“When the only certainty is uncertainty, keeping yourself educated and informed about how to maximize your savings and income will ensure that your life today and future planning remain on track,” says SimplyWise CEO Sam Abbas.
Read the full report here.
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This article was produced and syndicated by MediaFeed.org.
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