Many Workers Saving More Now Than Before the Pandemic

Despite many Americans admitting that they are behind schedule on saving for retirement, many also say they have been saving as much or more since the pandemic began. 

According to a Bankrate survey of 2,225 American adults conducted from Oct. 20-22, 2021, nearly 63% of workers report that they are saving as much or more than they were before the pandemic. Of that percentage, nearly 39% said they are saving about the same amount for retirement as before the pandemic, while more than 24% said they are saving more now. Only 14% said they are saving less for retirement than before. However, around 23% of respondents said they were not contributing either before or now.

Bankrate notes that workers in all age categories said they are contributing more toward retirement now compared to pre-pandemic, with Millennials and Gen Z among the top. By gender, men (30%) are more likely than women (18%) to be contributing more to their retirement accounts now than before the pandemic.

Not surprisingly, the survey also shows that higher-earning households were more likely to have stepped up their contributions since the pandemic started:

• Among households earning less than $50,000, 18% say they are contributing more now than before, and 18% are contributing less.
• For households earning $50,000-$99,999, about 24% say they are contributing more and 11% less.
• For households earning $100,000 or more, about 37% say they are contributing more to retirement now than before the pandemic, while 11% are contributing less.

The reasons cited for saving less were varied, but lack of income was the largest, according to the findings. While respondents could choose more than one answer in the survey, the most cited reasons for why workers are saving less now include:

• loss of income (49%);
• additional expenses (32%);
• additional debt (21%);
• wanting to keep more cash on hand (19%); and
• helping other adult family members financially (14%).

Another 9% said none of these factors, while 5% pointed to some other reason. 

Early Withdrawals

Meanwhile, even though many workers say they are saving more since the start of the pandemic, a similar number of respondents said they have taken an early withdrawal from their retirement plan. Overall, Bankrate found that 51% of Americans have taken an early withdrawal from a retirement account, but most (31%) of those occurred before the pandemic; 12% did so during the pandemic; and 8% took an early withdrawal both before and during the pandemic.

About 20% of respondents with retirement accounts have taken an early withdrawal from a retirement account since the full onset of the pandemic struck in March 2020. Bankrate observes that before the pandemic, younger workers were the least likely age group to have taken early withdrawals, but the pandemic apparently shifted that dramatically. The survey found that, when factoring in the small percentage of each age group that had taken withdrawals both before and during the pandemic, Gen Z then has the lowest likelihood to have kept their retirement accounts untouched. 

“Saving for both emergencies and retirement are vitally important to current and future financial security,” observes Greg McBride, Bankrate Chief Financial Analyst.

“Even a modest emergency fund acts as a buffer from early retirement account withdrawals when unplanned expenses arise, allowing the power of compounding to continue to work its magic.”

Not surprisingly, the survey also found that lower-income households thought they were further behind in their retirement savings than higher-income households.

But while younger generations appear more likely to tap their retirement savings early, it was older generations that were more likely to say they were behind on retirement savings. Millennials (15%) and Gen Z (12%) were the most likely to say they were ahead of plan, compared with Generation X (9%) and Baby Boomers (6%). Among those who said they were right on track, the difference between age groups was minimal, ranging from 19% of Gen X to 24% of Gen Z.

Overall, the survey found that 52% of workers say their retirement savings are not where they need to be.