As 2020 draws to a close, many Americans continue to endure the health and economic effects of the pandemic, and they are concerned about 2021, an Allianz Life survey finds.
Forty-four percent of respondents worry that the market has not yet bottomed out, and 72% believe that the market will continue to be highly volatile in the coming year.
As a result, only 25% of survey participants said they are ready to invest now, down four percentage points from last quarter.
Even more indicative of the current financial predicament many are coping with is that 34% had to dip into their retirement savings because of the coronavirus’s effect on the economy.
“We’ve watched as the pandemic continues to wreak havoc on people’s financial and retirement strategies, whether that is from unexpected job loss or early withdrawal of retirement assets,” Aimee Johnson, vice president of advanced markets and solutions at Allianz Life, said in a statement.
“It’s clear that people remain nervous about market risks and how their finances will continue to be impacted not only in 2021, but for many years ahead.”
Allianz Life conducted an online survey in December among a nationally representative sample of 1,003 adult respondents.
Effects on Retirement Savings
As the pandemic nears its 10th month, 53% of survey participants say the coronavirus is having a negative effect on their financial retirement plans, and 33% say they do not feel financially prepared to ride out its economic effects.
Millennials have taken the biggest financial hit during the pandemic, according to the survey — 48% said they have had to dip into their retirement savings, compared with 32% of Gen Xers and 22% of baby boomers.
Moreover, half said they have also either stopped or reduced contributions to their retirement savings, compared with 41% of Gen Xers and 36% of boomers.
Despite the pandemic’s current harsh realities, many still have hope for what next year will bring. Sixty-six percent of respondents said they expected the economy to improve in 2021, and another 67% thought their financial situation would ultimately get better.
Among the lessons many Americans say they have learned in 2020, two-thirds reported that the conoravirus’s effects on the economy had made them rethink how to protect their retirement savings.
And if market volatility persists in the coming year, 56% said they would likely have to adjust their retirement strategy.
“While many of us are ready to leave 2020 behind, we shouldn’t forget some of the things we can take away from this unprecedented year, including how to prepare for and manage risks within a retirement strategy,” Johnson said.
“Taking steps to help mitigate these risks now can make a big difference in both the long- and short-term as we wait to see what 2021 has in store for us.”
— Related on ThinkAdvisor: