A Deeper Dive into Retirement Confidence

There is concern regarding the effect of the pandemic on retirement security, and yet some of the more dire expectations have not come to fruition. That was the message of co-authors of a recently released report on retirement security, who offered a closer look at their findings. 

In a Feb. 25 webinar, Dan Doonan, Executive Director of National Institute of Retirement Security (NIRS), and Tyler Bond, NIRS Research Manager, provided their perspectives on the study they co-authored, “Retirement Insecurity 2021: Americans’ Views of Retirement.”

“COVID has affected many Americans’ concerns and plans for retirement,” Doonan said. He noted that just over half of those they studied express concern that COVID-19 has affected their ability to achieve a secure retirement. The nation is highly polarized, Doonan said, but “Americans are united in their worry about retirement issues.” 

Furthermore, Doonan said, “younger generations will need to do more to have retirement security than other generations have,” and “all the trend lines show that we are going to have an increase in multigenerational households.”

Making it Personal 

Doonan also discussed the effect of the pandemic on the timing of retirement. He reported that more than one-third are rethinking when they will retire; two-thirds of those now think they will retire later than they had planned before the pandemic. “People view working longer as a way to rebuild retirement planning,” he said. He added that it is worth noting that responses about when to retire in light of the effect of the pandemic on their readiness “vary by group.” 

And their concerns go beyond timing for leaving the workforce; they extend into retirement itself. Doonan said that a “large number” of Americans are concerned about their economic condition during retirement. 

Those concerns may have reinforced concerns about saving for retirement that were already there. Doonan said that more than two-thirds of Americans say that the United States faces a retirement crisis, but that “this has been largely consistent over time.” He said that:

• 68% of those they studied agree that the average worker cannot save enough for retirement on their own, and 70% say workers lack the skills to manage their money in retirement; and
• 58% say saving for retirement is getting harder, and that nearly two-thirds of Americans are already expecting to work past normal retirement age in order to build financial security for that time of life. 

Good News 

But there also is some good news. Doonan remarked that “there were not as many retirement distributions as we may have expected,” and that that is “especially interesting since the CARES Act made that easier to do.” 

And while Americans share concern about retirement readiness, they also are “united in strong support for Social Security,” Doonan said. Bond reported that 79% say that Social Security should be a priority for the government regardless of fiscal deficits. And their concern is for others beyond themselves: Bond said that 60% agree that workers and employers should contribute more to Social Security to make sure it’s in place for future generations. Furthermore, 50% support expanding Social Security and 78% believe that it should be supplemented.

Bond remarked that “this shows interest in stable sources of income in retirement, and they know Social Security offers that.” Doonan added that there is bipartisan belief in the importance of pension plans as savings vehicles. “People feel that pensions are a good source of income for retirement,” Bond agreed.