Article written by Lance Roberts, via RealInvestmentAdvice.com
Despite trillions of dollars of liquidity injection from the Fed and a growing rebound in economic activity, massive uncertainty still remains for those approaching retirement and retirees, as quoted by SimplyWise in their latest “retirement confidence” survey.
So, what is the problem? Here’s what SimplyWise had to say:
The current public heath, economic, and political reality in the United States has created enormous uncertainty for many Americans. A majority of citizens lack the savings to last them even three months. That savings gap is even more drastic when it comes to retirement. Indeed, the pandemic has wrought havoc on the retirement plans of many, driving some into early retirement and forcing others to postpone long-anticipated retirement plans. A majority of people today are more concerned than ever about retirement. According to the September 2020 SimplyWise Retirement Confidence Index, 58% of Americans are more concerned about retirement today compared to a year ago.” – SimplyWise September Index
Highlights of the article include:
- Given the current economic climate, only 19% of Americans plan to invest more in the stock market. Though, only 34% of households with an income of more than $100k plan to invest more in stocks.
- 40% of respondents are planning to save more.
- 51% of Americans think the stock market will decline by 20% over the next 6-months. Only 5% believe it’s improbable.
- 36% believe the economy will worsen in the next 6-months, and 28% think it will get better.
- 63% of Americans are confident in the future of Social Security if Biden is elected versus only 44% if Trump is elected.
- 86% of Americans are concerned that the current payroll tax will hurt Social Security in the long term. (90% of Dems and 83% of Republicans).
Additionally, SimplyWise has also released some pretty dire statistics relating to the current financial insecurity of Americans:
- 15% of people who lost their job due to COVID-19 are now planning to retire earlier than anticipated. Just 10% in their 50s and 60s are now planning to retire earlier than expected.
- 58% of people in their 50s are not confident they’ll maintain their same quality of life in retirement.
- 30% of people in their 50s saved $0 for retirement in the last year—and 43% of them couldn’t last more than a month on their savings.
- 27% of Americans are now considering tapping their 401(k)—a pandemic high.
- 45% of Hispanics, 39% of Black, and 34% of White Americans couldn’t last a month on their savings.
- 63% of Americans feel
However, this is not all to blame on the virus, as a lack of wage growth and rising costs of living have eroded any ability to build savings for retirement.
In a survey done by Kiplinger and Personal Capital, a publisher of business forecasts and personal finance advice, Americans said the biggest roadblocks to saving for retirement were:
- The high cost of health insurance. “From 1999 to 2017, the cost of family health insurance coverage has more than doubled the amount of take-home pay it consumes.”
- Disappointing investment performance. “Just under 30% of all respondents (29.4%) said that disappointing investment performance had stopped them from saving as much as they would have liked to for retirement.”
- The amount of consumer debt they carried. “21.3% of Americans said that debt, not including student loans, kept them from saving for retirement combined with the increased costs of living.”
A retirement crisis may be looming …
Works Cited:
https://www.zerohedge.com/markets/enormous-uncertainty-despite-fed-fueled-market-surge