One in five U.S. workers indicate their confidence in their
ability to retire comfortably has declined in light of the coronavirus pandemic
— and just 27% are confident they can look forward to a lifestyle free of
financial worry, according to findings released Friday by the Los Angeles-based
Transamerica Center for Retirement Studies.
The October study, Retirement Security: A Compendium of
Findings About U.S. Workers, gauges the impact of the pandemic on workers’
employment and finances. It finds that 52% of workers have experienced one or
more negative impacts to their employment including job loss, furloughs,
reduced hours, reduced pay and/or retiring early.
LGBTQ workers are among the most impacted, with 65% of LTBTQ
workers saying they have experienced one or more negative impacts to their
work, compared with just 50% of non-LGBTQ workers. As a result of the pandemic,
33% of all workers have already planned and/or plan to take a loan and/or
withdrawal from their qualified retirement account such as a 401(k), 403(b) or
similar plan or IRA.
Also, 59% of LGBTQ workers, 50% of urban, 43% of millennials
and 42% of men are among workers more likely to be dipping into their
retirement savings. Credit card debt may pose a threat to retirement security
for many, especially to Generation X workers. More than a third, 33%, of all
workers cite paying off credit card debt as a financial priority, including 45%
of Generation Xers. Moreover, if their finances have been or were to be
negatively impacted by the pandemic, 35% of such workers indicate they would
rely on credit cards.
“Before the pandemic, the retirement prospects for many
workers was iffy at best,” said Catherine Collinson, CEO and president of the Transamerica
Institute and the TCRS. “The pandemic has exacerbated that situation. Millions
of workers have experienced negative impacts to their employment, ranging from
pay cuts and furloughs to job loss. Some workers have even dipped into their
retirement accounts to make ends meet.
“It will take years for many workers to financially recover
— and some may never recover. Help from policymakers is needed to strengthen
the U.S. retirement system,” she said.
According to Collinson, policymakers can pave the way for
improving retirement security by “enacting legislation and implementing reforms
that can ensure the sustainability of government benefit programs, encourage
employers to offer benefits to their employees, and help prepare workers for
long, healthy and productive lives.”
Asked what the new president and Congress should prioritize,
nearly half of respondents’ most often cited responses involve strengthening
safety nets and improving health care, including addressing Social Security’s
funding shortfalls, making out-of-pocket healthcare expenses and prescription
drugs more affordable, addressing Medicare’s funding shortfalls, while just 37%
of workers cite innovating solutions to make long-term care services and
supports more affordable.
Further priorities cited by workers include expanding access
to employer-sponsored retirement plans, IRAs and other savings programs,
implementing financial literacy curriculum in schools, increasing access to
affordable housing, expanding the Saver’s Credit, creating incentives for
individuals to obtain ongoing training and education, and allowing employers to
match employees’ student loan payments as a contribution in their retirement
“Workers share many retirement-related risks; however, by
increasing an understanding of the differences across demographic segments, we
can identify solutions to help those in greatest need,” Collinson said.
Last, the survey points to steps workers can take to improve
their planning and safeguard their situation.
Just 27% of workers have a written financial strategy for
retirement. Those more likely to have a written strategy include LGBTQ
employees at 41%, college graduates at 40% and urban at 36%.
Legal documentation is lacking. Amid the pandemic, it has
become even more important to have financial and medical-related legal
documents in place. Just 22% of workers have a medical power of attorney or
proxy, and college graduates are more likely than non-college graduates to have
one. Similarly, 27% of college graduates have a financial power of attorney
compared with just 17% of non-college graduates.
“From a societal level to individual households, the
pandemic has disrupted nearly every aspect of our lives and laid bare
weaknesses in our retirement system,” Collinson said. “As we navigate the
pandemic with an eye toward the future, policymakers, industry, employers and
individuals have a tremendous opportunity to work together and create a
stronger, sustainable and inclusive system in which everyone has the ability to
live, work and retire with dignity.”
The compendium is based on a survey conducted in October of
1,173 workers who were currently employed, recently unemployed and/or
furloughed amid the pandemic. As part of TCRS’ 20th Annual Retirement Survey,
it also draws from a broader survey of 5,277 workers conducted in late 2019. It
offers demographic analyses and insights about workers by self-identified
employment status, urbanicity, sexual orientation, level of education,
generation, gender and ethnicity.
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