Four in five American adults in a new study said the coronavirus pandemic and subsequent economic downturn would affect their ability to achieve long-term financial security, and three in five said the effect would be moderate to severe.
At the same time, the study released Wednesday by Northwestern Mutual found confidence in a robust recovery — both personally and for the country — to be strong.
Eighty-three percent of participants believed they would ultimately achieve long-term financial security, with 44% saying this would occur a year or less. Thirty-two percent expected it would take two to five years to achieve long-term financial security.
Seventy-six percent were confident that the country would return to full employment, with 47% expecting that in a year or less and 39% believing that would take two to five years. Similar percentages expected the country to return to economic growth.
“These numbers speak to the enormous resiliency people are showing at a time of great financial uncertainty,” Christian Mitchell, chief customer officer at Northwestern Mutual, said in a statement.
“As a nation, and as individuals, we’re in recovery mode. But there’s a resounding confidence that comes across in these findings — people believe in their ability to bounce back.”
The study is part of a research series conducted by The Harris Poll on behalf of Northwestern Mutual. In this wave, 2,702 Americans 18 or older participated in an online survey conducted between June 26 and July 10.
Improved Financial Discipline
According to the survey, Americans’ financial habits and discipline have improved since the coronavirus outbreak.
Whereas 71% before the pandemic said their financial planning needed improvement, 61% in the new survey said this was now the case.
Respondents also said they had improved their financial discipline in other ways.
Twenty-eight percent considered themselves “highly disciplined” financial planners today, up from 22% who did so before the pandemic, meaning they know their exact goals, develop specific plans to meet them and rarely fall off track.
One quarter said they were “informal” financial planners today, down from 29% before the pandemic. In other words, they have a general sense of their goals and how to meet them, but do not have a plan in place.
“It’s good to see these behavioral habits are trending in the right direction,” Mitchell said. “People appear to be cautiously optimistic about the future and a growing number are taking responsibility and action, which are key ingredients for financial planning.”
Covering Living Expenses
The study found that although respondents had a positive long-term view, many still had to address near-term financial needs during an economic downturn.
Thirty-eight percent of participants reported that they had had to take these steps to cover their living expenses since the pandemic:
- Dip into personal savings or emergency funds – 19%
- Borrow money from family or friends – 13%
- Tap retirement savings – 9%
In addition, 26% of respondents said they had taken advantage of payment deferral plans, including ones for mortgages, rent, credit card bills, utilities, student loans and auto loans.
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