Retirement savings on the decline amid coronavirus
A recent study shows Americans are changing their retirement savings habits in the wake of the coronavirus pandemic.
A survey from MagnifyMoney found nearly half of all savers have shifted how they set aside money for retirement, with 21% reducing contributions to retirement accounts and 26% of respondents no longer saving. Three in 10 who responded to the survey said they have withdrawn funds from their retirement accounts within the last two months, while another 19% plan to do so but have not yet. The average withdrawal was more than $6,700.
Many credit unions offer retirement savings products for members, and the average credit union member’s age has hovered in the late 40s for decades — key years for setting aside money for retirement.
The study found stark demographic differences regarding withdrawals. Just 7% of baby boomers said they had taken funds from their nest egg since the pandemic became widespread, compared with 37% of millennials and 40% of Gen Xers. Thirty-seven percent of those with incomes of six figures and above said they had pulled from their retirement savings.
MagnifyMoney reported the majority of consumers who raid their retirement accounts are doing so to cover necessities like groceries, housing payment and bills, and 25% were doing so in part to take advantage of legislation permitting penalty-free withdrawals. Twenty-six percent said they took funds out because of a job loss while 15% did so because of concerns about losing money in the stock market.
A whopping 53% of baby boomers said they had stopped making retirement contributions in the last two months, compared with 17% of millennials and 10% of Gen Xers.
“The sheer number of Americans who are dialing back on what should be a main financial priority underscores the dire financial state that many people currently find themselves in, as the economy continues to grapple with the havoc caused by COVID-19,” the company said in a press release.
MagnifyMoney reported that 60% of respondents regretted their decision to withdraw money from retirement accounts and 77% said they intend to replenish their accounts later.