Coronavirus: early retirement withdrawals and savings by generation. New research examines how the COVID-19 pandemic has impacted retirement planning.
Initially, the coronavirus pandemic highlighted how unprepared people were for a financial disaster, putting a spotlight on the lack of emergency savings and an overreliance on credit cards. New research shows COVID-19 has also had a significant impact on long-term financial planning.
The majority of workers (52 percent) now expect to work past age 65 or don’t plan to retire at all, according to a new study by the Transamerica Center for Retirement Readiness. In light of the coronavirus pandemic, 23 percent of workers say their confidence in their ability to retire comfortably has declined.
“The long-term implications of the coronavirus pandemic and recession on retirement security have yet to be fully realized,” said Catherine Collinson, CEO and president of Transamerica Institute® and TCRS. “However, the financial vulnerabilities among workers across all generations are becoming clear.”
Coronavirus: Early Retirement Withdrawals and Savings by Generation
Millennials Retirement Withdrawals, Savings and Financial Stress
- 22 percent of Millennials have already taken out a loan and/or early withdrawal.
- 20 percent plan to take out a loan and/or early withdrawal.
- Millennials have an estimated median of $23,000 saved for retirement.
- 26 percent of Millennials have student loan debt.
- Millennials have saved an estimated median of $3,000 for emergencies.
Generation X Retirement Withdrawals, Savings and Financial Stress
- 15 percent of Gen Xers have already taken or plan to take out a loan and/or early withdrawal.
- Gen Xers have an estimated median of $64,000 saved for retirement.
- 52 percent of Gen Xers have credit card debt.
- Gen Xers have saved an estimated median of $5,000 for emergencies.
Baby Boomers Retirement Withdrawals, Savings and Financial Stress
- 10 percent of Baby Boomers have already taken or plan to take out a loan and/or early withdrawal.
- Baby Boomers have an estimated $144,000 saved for retirement.
- 25 percent of Baby Boomers are debt-free.
- Baby Boomers have saved an estimated $15,000 for emergencies.
“Although our research paints a sobering picture, it also surfaces some opportunities that can help mitigate the negative economic effects of the pandemic and improve retirement prospects,” Collinson said.
Providing financial wellness benefits, offering flexible work arrangements and on a larger scale, collaborative efforts with policymakers and industry leaders can increase awareness of relief programs like unemployment insurance and alert employees to potential alternatives to making early withdrawals from retirement accounts.
“Workers’ ability to achieve a secure retirement highly depends on a robust employment market, the availability of retirement, health, and welfare benefits, the preservation of safety nets such as Social Security and Medicare,” Collinson said. “Even amid the pandemic and current hardships, we are presented with an opportunity to come together to reimagine our world — including how we live, work, retire, and age with dignity.”