Uncharted Waters

How COVID-19 May Be The Catalyst To More Retirement Savings

Difficult financial year has Americans pledging to seek financial advice

A new survey from Empower Retirement and Personal Capital measures the impact of the pandemic on clients’ savings goals. Access the survey here.

January 27, 2021 — GREENWOOD VILLAGE, Colo.–(BUSINESS WIRE)–The COVID-19 pandemic and its effects on the economy had Americans tightening their belts, and it may be the catalyst that now drives them to spend less and save more.

That’s according to a new survey from Empower Retirement and Personal Capital conducted by Harris Poll that asks working and retired Americans how the coronavirus economy has affected them and their savings plans. The results show that Americans are worried about the overall economy, but they are committed to setting and reaching their financial goals.

Survey results and analysis are detailed in a research paper, “In Uncharted Waters, Savers Keep Both Hands on the Tiller.”

The pandemic highlighted the importance of saving, according to the survey. When asked about their financial goals, “saving for retirement” and “paying off personal debt” topped their lists. Survey respondents said they want to spend more time planning their finances and learn more about financial strategies.

The uncertainty of the economy, even as a coronavirus vaccine rolls out, has sparked more interest in expert financial advice. Survey results show 83% of respondents said they want to minimize worrying about their finances this year, mainly through increased savings.

Setting Goals

  • 52% of respondents said they will seek more guidance when it comes to their financial strategies.
  • 33% said they are more likely to work with financial professionals as opposed to 24% at the onset of the pandemic.
  • 41% of survey respondents said they plan to spend less money on non-essential items.
  • 38% percent plan to save more of each paycheck they receive.

“This past year has been difficult for so many Americans. Those faced with financial hardships found themselves changing or adjusting their financial plans,” said Stephen Jenks, Empower Retirement Chief Marketing Officer. “But this tough year also has inspired some workers and retirees to reexamine their financial goals and seek expert advice on the best strategies to help them achieve a secure retirement.”

The survey shows people are determined to save more and be prepared for the future, no matter what happens, and they are looking for advice on how to move forward financially in the new year.

“COVID-19 impacted every person in different and often exhaustive ways,” said Craig Birk, CFP, Chief Investment Officer at Personal Capital. “So many families suffered loss, hundreds of thousands of small businesses closed and millions of jobs vanished. For others, working remotely has had positive aspects.

“The good news is, for many, it’s not too late to turn things around. Working and retired Americans are saying they want to save early, often and aggressively.”

Excerpts From The Survey:

Ever since the collapse of the first speculative price bubble in 1637 — it centered on tulips and involved a plague outbreak in Holland — investors have known that bad financial news can come from messengers too small to see, much less predict. While stocks ultimately thrived during the past year of the COVID-19 pandemic, volatility remains a concern — and the broader global economy is on life support thanks to massive government interventions. In light of all this turmoil, how are Americans adjusting their personal financial goals?

A new survey conducted by the Harris Poll for Empower Retirement and Personal Capital reveals changing attitudes. Obviously, the most pain continues to be felt by those who have lost jobs and businesses. Millions of unemployed Americans are not in a position to save for the future. But we wanted to see how those fortunate enough to keep working during the pandemic, as well as retirees, are tweaking their financial goals going forward.

Amid Global Uncertainty, Personal Confidence

But this tough year also has inspired some workers and retirees to reexamine their financial goals and seek expert advice on the best strategies to help them achieve a secure retirement...

American workers and retirees say they’re confident in their ability to manage their personal finances, despite deep pessimism about the larger economy. Yet when it comes to expectations for 2021, both employed and retired Americans are down-shifting from optimism toward more realistic goals of stability and survival.

In April 2020, as the first pandemic wave was just taking hold (and just after the S&P 500® had plunged 34%), 29% of respondents were still “optimistic” about their own financial future.

By December and the second pandemic wave, only 22% of respondents said they were optimistic about their own finances, while the percentage feeling “stable” increased by 10 percentage points — from 26% to 36%.

And the pandemic continues to dampen spirits. Lockdown fears loom large — fully two-thirds of respondents said they’re bracing for financial pain if major lockdowns continue to roll out. Forty-four percent worry about losing money on investments, with an equal number saying a lockdown could impact their ability to save.

Taking Back Control Of Personal Finances

COVID may end up being the catalyst that some Americans needed to rethink their relationship with money. Unable to control the virus, the economy or the political environment, Americans are narrowing their focus to their immediate locus of control: the financial stability of their own households. In our survey, 83% of respondents said they want to minimize worrying about their finances this year, mainly through increased savings.

Fully 70% of respondents (again, all of them people with jobs or retired) say they’re putting more money into savings. This data could in part reflect the fact that people are spending less (if anything) on vacations, restaurants and entertainment.

Nevertheless, more money is being saved and invested — especially among some segments of the population. For example, parents (80%), Hispanic workers (81%), Black workers (75%) and Asian workers (78%) are more focused on saving than other groups.

 

 

 

About Empower Retirement
Headquartered in metro Denver, Empower Retirement administers approximately $884 billion in assets for more than 12 million2 retirement plan participants as of December 31, 2020. It is the nation’s second-largest retirement plan recordkeeper by total participants.3 Empower serves all segments of the employer-sponsored retirement plan market: government 457 plans; small, midsize and large corporate 401(k) clients; non-profit 403 (b) entities; private-label recordkeeping clients; and IRA customers. Personal Capital, a subsidiary of Empower Retirement, is an industry-leading hybrid wealth manager. For more information please visit empower-retirement.com and connect with us on Facebook, Twitter, LinkedIn and Instagram.
About Personal Capital
Personal Capital, an Empower Company is a remote-delivery, industry-leading digital wealth management company that helps people transform their financial lives through technology and advisory services. The company’s state-of-the-art tools and technology provide investors with a complete financial picture, utilized by millions of users and tens of thousands of clients. Its registered investment advisors provide expert guidance, and customized strategies, based on a personal understanding of an investor’s financial picture and goals. Personal Capital currently manages more than $16 billion in assets (as of December 17, 2020) virtually delivered from offices across the United States. For more information, please visit personalcapital.com or connect with us on Facebook [facebook.com], Twitter [twitter.com] or LinkedIn [linkedin.com].