An estimated 31 million people — 27% of those working or recently unemployed — who have retirement savings are withdrawing or planning to withdraw from those funds due to financial needs caused by the coronavirus, according to a recent study by Bankrate.com.
Age-wise, millennials seem to be at the weakest point, with 20% of them having already used retirement savings as a source of income since the outbreak, compared with 8% of Gen Xers and 10% of baby boomers, states the study.
“More than one in four working or recently unemployed households with retirement savings has either already used some for immediate income or plans to do so, including half among the recently unemployed,” according to Greg McBride, Bankrate.com chief financial analyst. “This is most pronounced among those younger households who may miss out on decades of future compounding if forced to turn to their retirement savings during these trying times.”
- 45% of the lowest earners (making under $30,000 per year) have pulled money out of savings during the pandemic. This compares to 30% of those making $30,000 to $49,999, 34% of those making $50,000 to $79,999 and 17% making $80,000 or more.
- Nearly half of those working or recently unemployed are contributing the same amount to their retirement savings as before the pandemic. However, 18% are contributing less.
- Reasons stated for the reduction in contributions included loss of income (62%), wanting to keep cash on hand (33%), additional expenses (20%), helping other adult family members (18%) or additional debt (17%).
- 56% of those who are still employed are contributing the same amount to retirement savings as before the pandemic, compared with 22% of those who are recently unemployed.
- 59% of households making more than $50,000 a year are contributing the same amount to retirement savings as before the pandemic, versus 39% of those making less than $50,000.
The online survey of 2,407 adults was done through YouGov Plc. from May 13-15.
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