COVID-19 Squeeze on U.S. Adults Tightens: Prudential
Problems with paying bills increased sharply between May and December 2020.
About 17% of U.S. adults said in December 2020 that the COVID-19 crisis had cut their household income by 50% or more, and 36% said their annual household income had fallen below $30,000.
In May, only 19% of the participants in a similar Prudential survey said their annual household income was under $30,000.
Prudential Financial Inc. has reported those findings in a summary of results from its latest financial wellness census survey.
The sample for the latest survey included 2,201 U.S. adults ages 24 through 74. An outside company conducted the survey for Prudential from Dec. 18, 2020, through Dec. 20, 2020.
Prudential has been conducting surveys under the financial wellness census label since 2018.
Impacts on Payments and Accounts
Some of the responses to the latest survey show how the COVID-19 pandemic, and the social distancing rules and other moves made to fight the pandemic, may be affecting life insurers and other financial services companies.
Prudential found, for example, that the percentage of participants who said they have fallen behind on bills increased to 24%, from 11% in May.
About 9% of the participants said they had missed a mortgage or rent payment.
To compensate for reductions in income, many participants reported they were using debt, emergency savings or other resources other than ordinary income to make the payments they were making.
Here’s a look at the usage rate for some of those special resources for making payments:
- Withdrawals From 401(k) Plans: 11%
- Withdrawals From Individual Retirement Accounts: 6%
- Withdrawals From Life Insurance Policies: 6%
About 20% of the participants said they had reduced or wiped out their emergency savings.
Impacts on Consumption
Prudential also found a big impact of the COVID-19 crisis on what people are spending their money on.
In theory, for example, people affected by a pandemic might need more medical care.
But 15% of the survey participants said they had reduced or eliminating spending on medical care because of the effects of the crisis on their income.
Impacts on Employed People
Prudential sees the crisis affecting the people who still have jobs along with the people who have lost their jobs.
The pandemic has led to a reduction in compensation for 15% of the workers who are still working.
About 15% of the participants said their work hours have increased.
About 8% of the participants said that their work hours have increased, and that they are not being paid for the extra time they are working and the evolving demands.
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