Pandemic Threw a Wrench in Retirement Plans

According to a recent survey from finance magazine Kiplinger and wealth management organization Personal Capital, over 40% of those saving for retirement are less confident in their savings now. The pandemic triggered a significant economic recession with the highest number of job losses since the Great Depression, reducing the ability to save and in many cases, forcing people to withdraw from savings.

33% of respondents took a distribution or loan from their retirement account. 58% of loans through the CARES Act borrowed between $50,000 and the maximum allowed of $100,000, and 33% of those who withdrew money took out $75,000 or more. A third of respondents also said they plan to work longer and delay their retirement, and some were forced to do the opposite and retire early without the ability to find work at their age. This could pose an issue, since retirees are quite reliant on Social Security. 20% of retirees use Social Security for at least 90% of their income, and 50% use it for over half their income.

The survey also only included people with at least $50,000 in their retirement savings. The problems may be worse for those without much savings, which could be a large segment of the population. In 2019, almost half of those in the US between the ages of 32 and 61 have no retirement savings at all. The majority of those with savings had less than $21,000. And remember that this was pre-pandemic — the recession only would have exacerbated this issue.

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