Nearly a third of Americans said the Covid-19 economic impact has either delayed or accelerated their time line for retirement, according to research from Northwestern Mutual.
The “Planning & Progress Study 2020” found that 20% of U.S. adults age 18 and older plan to delay retirement beyond what they expected, while 10% plan to retire earlier than anticipated, with millennials most likely to move up their plan date.
One in six millennials indicated they would accelerate their plans to retire. They said their earliest target date would be age 61.3, which is seven and a half years younger than baby boomers at 68.8, the study noted. Gen X said their target age is 63.2 and Gen Z said 62.5.
Gen X, the study showed, is the most likely generation to say the pandemic has caused them to push back their planned retirement date, something said by 25% of them, while 22% of Gen Z said so, 19% of millennials and 14% of boomers.
The study also revealed that Americans’ views on the greatest obstacles to financial security in retirement changed during the pandemic. Before the Covid-19 crisis, the lack of savings was the top obstacle (named by 42% of the respondents), followed by health-care costs (named by 38%) and the economy (named by 34%). Now it is the economy (named by 49% of respondents) followed by the lack of savings (cited by 33%) and health-care costs (cited by 32%).
And while respondents are heavily relying on Social Security as a funding source during retirement, the study showed that they do not have great faith the program will actually be there for them when they need it. Social Security ranked as the top source of retirement funding, accounting for 27% of Americans’ overall funding picture on average. But one-fifth of respondents believe it is not likely Social Security will be there when they are ready for it.
“This is a good reminder that there are always factors to consider that are outside of people's control, such as the economy, health-care costs and Social Security,” said Christian Mitchell, executive vice president and chief customer officer at Northwestern Mutual, in a statement. “That only underscores how important it is to focus on the things you can control such as saving, investing and protecting your assets. A solid financial plan and a trusted advisor can help.”
Twenty-one percent of the respondents said they expect to work past the traditional retirement age of 65. Of those, nearly half (45%) said it is because of necessity and 55% said it is because of choice. But when the study looked closer at those who plan to work out of necessity, it found that 60% cited not having enough saved to retire comfortably as the top reason.
Others said they do not believe Social Security will take care of their needs (a problem cited by 58% of respondents); 49% are concerned about rising costs like health care; and 20% cited unexpected situations that cut into their retirement savings.
As for those who plan to work past the age of 65 by choice, the top reason given by nearly half (49%) is that they enjoy their job or career and would like to continue working. Other reasons include the desire for additional income (named by 43% of respondents); the need for a social outlet that will help them stay active and prevent boredom (cited by 34%); and the desire to have something that will let them give back to the community (cited by 21%).