While many say borrowing from their accounts put them behind in saving for retirement, 68% are in a better place financially because they took a loan or withdrawalFindings from a recent Voya survey show opportunities for employers to help employees get back on track and identify ways to build emergency savings.
Windsor, Conn., April 26, 2021 — Voya Financial, Inc. (NYSE: VOYA), announced today new findings from a consumer survey revealing that nearly half (47%) of individuals who took a loan or withdrawal from their retirement plan, a traditional lender or investments due to COVID-19, agree or strongly agree they withdrew more than they needed. Still, a significant amount (68%) of individuals agree or strongly agree they are now in a better place financially because they took a loan or withdrawal.
As the COVID-19 pandemic led to lost wages, a rise in health care needs and other unplanned expenses, many individuals experienced financial uncertainty like never before. This is why the Coronavirus Aid, Relief, and Economic Security (CARES) Act included provisions that enabled those struggling with economic hardship from the coronavirus pandemic to take early withdrawals (“coronavirus-related distributions”) or loans from qualified retirement accounts.
Becoming Better Prepared For Emergencies
“When financial hardship hits, we understand that individuals need to take action to support themselves and their families,” said Charlie Nelson, vice chairman and chief growth officer, Voya Financial. “It is also telling that nearly half of individuals say they took more than they needed. With greater understanding as to how individuals accessed their workplace retirement plans and other long-term savings to meet their needs, we believe there is an opportunity to leverage this new research and look at ways we can help individuals become better prepared for financial emergencies.”
Despite the majority of respondents agreeing they are in a better place financially as a result of taking a loan or hardship withdrawal, Voya’s survey also uncovered concern about the impact that borrowing from their retirement savings will have on their long-term financial wellness. Specifically, a majority (65%) agreed that borrowing from their accounts has put them behind in saving for retirement. What’s more, over half (59%) of individuals wish they had consulted a financial professional before taking a loan or withdrawal.
A First Line Of Financial Defense
“This past year has especially highlighted that individuals are in need of a first line of defense when experiencing a financial shock and, as a result, many may have had no choice but to turn to their hard-earned savings. It’s also important for individuals to know that if they did have to do so, they can get back on track — and as employers we can help,” said Heather Lavallee, CEO of Wealth Solutions, Voya Financial. “We are working with many of our clients to help them understand ways that they can play a role in helping their employees rebuild their retirement savings and become better prepared for potential future short-term financial needs. This includes solutions and options for helping employees build their emergency savings both inside and outside of a retirement plan. And with many now possibly deciding how best to utilize a stimulus payment and or a tax refund, now is an opportune time to help individuals address their short- and long-term savings needs.”
According to Voya, many individuals have already taken actions to get back on track financially. The results of the survey also revealed that nearly four in 10 (38%) of Americans are reducing overall expenses, and over one quarter (29%) are re-evaluating their monthly budget.
As an industry leader focused on the delivery of health, wealth and investment solutions to and through the workplace, Voya Financial is committed to delivering on its mission to make a secure financial future possible for all Americans — one person, one family, one institution at a time.
All data outlined in this release are based on the results of a Voya Financial survey conducted through Ipsos on the Ipsos eNation omnibus online platform among 1,005 adults aged 18+ in the U.S. (featuring 154 who took a loan or withdrawal from retirement). Research was conducted March 12-15, 2021.