As 2020 comes to an end, more and more Americans are contemplating their decision to retire. Others are tapping their retirement savings, while some save more due to the economic fallout and impacts of COVID-19. A recent study by TD Ameritrade, the COVID-19 and Retirement Study conducted from April 24th through May 4, 2020, reports that 41% of Boomers, 43% of Generation X, and 46% of Millennials indicate they are still recovering financially from The Great Recession. COVID-19 undoubtedly adds another layer of financial stress and the ability to save for retirement for many people. Other findings from the study include:
- Before COVID-19, six in ten Americans regularly contributed to their retirement savings.
- Seven in ten Americans (71%) anticipate the pandemic to impact their retirement plans.
- 14% have decreased their retirement savings contributions.
- 11% have withdrawn from their 401(k).
While some people have withdrawn from their retirement savings account or decreased their contributions, others are reacting to COVID-19 and preparing themselves by saving more:
- 16% have increased their retirement savings contributions, and 31% are considering it.
- 10% have opened a new investment account, and 19% are considering doing the same.
- 10% have converted their IRA to a Roth IRA, and 17% are contemplating a Roth conversion.
Source: TD Ameritrade COVID-19 Retirement Study
Three quarters of the respondents in the study said that they plan to prioritize retirement savings post-COVID-19. For many, that includes saving more and considering part-time or full-time work in retirement or retiring later to make up the difference. Additionally, others indicate that they will consider living abroad in retirement in areas where the cost of living is less compared to the U.S.
As you contemplate your retirement and look toward the future, having a financial plan reflects where you are now and how your retirement plans may have changed. Even though COVID-19 may change your perspective on retiring, planning for your future should still take precedence.
If you need assistance to borrow from your retirement savings accounts penalty-free through the CARES Act, increase your retirement savings, or redo your financial plan, right now is an excellent time for us to meet.