COVID-19 Impacting Short Term Consumer Confidence, Retirement Planning
January 04, 2021 at 07:00 AM EST
A majority of today’s workers and retirees range from feeling cautious to pessimistic about the economic outlook for 2021, with nearly 75% concerned about how the global pandemic may impact their retirement savings, according to the latest Principal® Retirement Security Survey. The study gauged consumer concerns and actions around saving for retirement, financial plans, and reactions to COVID-19 and the accompanying market and economic impacts.
“COVID-19 and the resulting impacts have changed how many consumers think about their current and long-term financial security,” said Sri Reddy, senior vice president of Retirement and Income Solutions at Principal®. “Throughout the pandemic, we’ve engaged with our individual and business customers to provide real-time information that can help in managing their finances amid the uncertainty. As we reflect on the past year and look ahead to what 2021 may bring, we’re committed to helping workers and retirees feel more secure about their future by offering actionable insights and possible financial solutions.”
Consumers say health and financial security are their two top priorities this year. They also expressed a need for advice as they navigate their financial plans. And despite citing uncertain feelings about what 2021 may bring, workers and retirees reported high overall happiness during the fourth quarter of 2020 (85%) that’s consistent with 2020 pre-pandemic findings (86%). In addition, 71% of workers and 87% of retirees said they’re confident they’ll remain in a positive state of mind for the next few months.
Anticipating impacts from market volatility, consumers plan to improve their financial health
Nearly 75% of workers anticipate the pandemic is impacting their path to retirement, and the same percent of retirees anticipate an impact on their accumulated retirement savings. As a result, both workers and retirees plan to make changes to help improve their financial health, such as:
Looking to 2021, consumers identify what’s most important and where they need help
Poised with caution and maintaining a positive outlook toward the coming months, workers and retirees call attention to what they feel is most important in life, notably:
Opportunities to boost retirement confidence and preparedness
The percentage of respondents who work with financial professionals jumped several percentage points compared to pre-pandemic survey findings - from 37% (Q1) to 40% (Q4) for workers, and from 45% (Q1) to 57% (Q4) for retirees. Based on the survey results, Principal identified several notable areas in which financial professionals and those in the retirement industry may be able to offer valuable support to help individuals feel more prepared for retirement.
About the Principal Retirement Security Survey
Principal conducts periodic “pulse” surveys with customers, financial professionals, and consultants to gain their insights about how timely topics might be impacting them. The November survey findings explore consumer concerns and actions surrounding saving for retirement, financial behaviors related to market volatility, and COVID-19. Nearly 1,200 U.S. residents (35% retirees and 65% workers) who have at least one financial product or service with Principal participated in the study during November 2020.
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For retirement planning resources, including client guides, educational articles, and checklists, visit principal.com/prepare.
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