Emerging research suggests that predictions about the
coronavirus pandemic's impact on retirement haven't been as uniformly
frightening as feared or that conventional wisdom would have forecast.
To be sure, the pandemic extracted a large toll on the
health and finances of many Americans, and research continues on the
longer-term impact of the pandemic. The recent results can provide greater
insight into the differing behavior of participants and retirees because one
pandemic doesn't affect everyone equally.
The research and surveys from multiple sources show
resilience among participants in their retirement timing and Social Security
claiming, as well as public pension plans' resilience in maintaining a
financial foundation, especially for government employees who don't receive
Social Security. Government aid and a quickly recovering stock market meant
that the pandemic hasn't had as big an overall affect on savings and retirement
than did the economic collapse in 2008-2009.
When the coronavirus crushed the economy in early 2020,
"the natural inclination was to draw similarities to how older workers
responded in the Great Recession," said an October research report by the
Center for Retirement Research at Boston College.
During the Great Recession, "despite a desire to work
longer to replenish lost savings, the lack of available jobs forced many to
claim Social Security benefits as soon as they were eligible — at 62," the
report said.
"The COVID experience turned out to be very different
than the Great Recession" thanks to the stock market's recovery, and
"unprecedented" unemployment benefits "made looking for a job
much more attractive than claiming Social Security benefits," the report
said.
Gains in the stock market and housing market "allowed
some advantaged groups to retire early," the report said. However, the
economic recovery and the unemployment insurance aid "enabled many lower
paid workers to stay in the labor market, delay claiming, and preserve their
Social Security."
Overall, these "competing effects more than canceled
each other out and led to a slight decline in early claiming and more secure
retirements," said the report by Alicia H. Munnell, director of the Center
for Retirement Research; Anqi Chen, assistant director of savings research at
the center; and Siyan Liu, a research economist at the center.
The role of the social safety net in helping people ages 50
to 74 cope with COVID-19's economic impact was illustrated in a July report by
the Pension Research Council of the Wharton School at the University of
Pennsylvania, Philadelphia.
Unemployment insurance and the supplemental nutrition
assistance program provided "significant support," especially for
those 62 and older — "more strongly during the pandemic than during the
Great Recession," the report said.
"Even with programs like Social Security and SSI
(Supplemental Security Income), low income individuals after retirement are
eligible for SNAP (supplemental nutrition assistance program) benefits, and
many apply during recessions," said the report written by Robert A.
Moffitt, a professor of economics at Johns Hopkins University, Baltimore, and
James P. Ziliak, a professor of microeconomics at the University of Kentucky,
Lexington.
Retirement timing was "remarkably stable during a
period of upheaval in the labor market overall" in 2020, said a Sept. 19
analysis prepared by Daniel Thompson, a survey statistician in the Census
Bureau's Program Participation and Income Transfers Branch.
When asked how the pandemic affected their retirement
timing, 2.9% of people ages 55 to 70 who were employed in January 2020 said
they retired early or planned to retire early due to COVID-19, the Census
Bureau report said. Another 2.3% said they delayed retirement or planned to delay
retirement.
The greatest percentage of those retiring early or planning
to retire early was the 62-65 age group at 4.6%, the report said. The lowest
percentage was the 55-61 group at 2.2%. The early retirement rate for the 66-70
group was 3.5%.
"COVID was a non-event for retirement
expectations," said David Blanchett, head of retirement research at PGIM
DC solutions, a unit of Prudential Financial Inc., Newark, N.J., during a Sept.
15 webinar sponsored by the Employee Benefit Research Institute, Washington.
Based on PGIM data, Mr. Blanchett concluded that "there was relatively
little movement in retirement age expectations during COVID, especially for
older participants who are actually near retirement."
A study by EBRI detected optimism among older Americans'
retirement expectations.
"Elderly American adults did not adjust their
retirement expectations significantly in 2020, including planned retirement age
and Social Security benefit claiming age, despite many respondents indicating
that COVID-19 had impacted their work and financial situations," said the
EBRI report published in August by Zhikun Liu, a senior research associate.
"Although there is a natural upward trend for elderly
American adults to expect a later and later retirement age, this natural trend
of delaying retirement has no statistically significant relationship with the
COVID-19 pandemic," Mr. Liu wrote.
Click here for the
original article.