Retirement preparations were already top of mind for many Americans when the coronavirus pandemic erupted earlier this year. Now, some find their ability to save for that major life event permanently affected by the outbreak, according to a new study by Wells Fargo.
The survey found that over the past eight months, retirement has become particularly challenging for workers whose employment has been negatively affected by the pandemic.
Fifty-eight percent of these workers said they did not know whether they had enough saved to retire because of coronavirus, compared with 37% of all workers surveyed.
Moreover, among these same workers, 70% worried about how to make sure they do not run out of money in retirement, 61% said they were much more afraid of life in retirement and another 61% said the pandemic had taken the joy out of looking forward to retirement.
Wells Fargo noted that retirement savings illustrated how COVID-19 has driven some workers even further behind. Working men in the study reported median retirement savings of $120,000, compared with $60,000 for working women.
Yet for those affected by the pandemic, men reported median retirement savings of $60,000, versus $21,000 for women.
“With individual investors now largely responsible for saving and funding their own retirement, disruptive events and economic downturns can have an outsized impact on their outlook,” Nate Miles, head of retirement for Wells Fargo Asset Management, said in a statement.
“Our study shows that even for the most disciplined savers, working Americans are not saving enough for retirement. The good news is that for many of today’s workers, there is still time to save and prepare.”
The Harris Poll conducted online interviews in August with 2,660 working Americans whose employment was not affected by coronavirus, 725 Americans whose employment was affected, 200 high-net-worth American workers with at least $1 million in household investable assets and 1,005 retirees, all in the 18-to-76 age range.
Effect of Pandemic on Women, Gen Z
The study found that women and younger generations were also falling behind. Only 51% of women said they were saving enough for retirement, or that they were confident they would have enough savings to live comfortably in retirement.
Women affected by the coronavirus had saved less than half for retirement than men and were much more pessimistic about their financial lives. Fifty-nine percent of these women were also less likely to have access to an employer-sponsored retirement savings plan, and 77% were less likely to participate.
Although Gen Z workers started saving at an earlier age and were participating in employer-based savings programs at a greater rate than other generations, 52% of this group said they did not know whether they would be able to save enough to retire because of the virus.
Half of Gen Zers reported that they were much more afraid of life in retirement because of the pandemic, and 52% said it had taken the joy out of looking forward to retirement.
Glass Half Full
At the same time, the study showed that despite a challenging environment, 79% of workers were very or somewhat satisfied with their current life, 79% were in control of their financial life, 95% were able to pay for monthly expenses and 86% felt confident that they could manage their finances.
Seventy-three percent of retirees and 69% of workers reported feeling in control or happy about their financial situation. In addition, nine in 10 workers and retirees said they could positively affect their financial situation, and similar numbers of both groups said they could positively affect how their debt situation progresses.