Ready for this one? Good things have come out of the pandemic.
A new study “The four pillars of the new retirement: what a difference a year makesLed by Edward Jones, the leading investment and financial services advisory firm, in partnership with Age Wave, a think tank and consultancy firm, and The Harris Poll reports that 70% of Americans say the pandemic brought them to be more thoughtful and to pay more attention to their finances in the long run.
This kick-off is a good thing when it comes to future financial security.
The report is the third online tracking survey conducted in the United States from May 2020 to March 2021 by this team. The survey was conducted March 22-24 among 2,042 US adults aged 18 and over, including 616 retirees and 335 pre-retirees (aged 50 and over and planning to retire). The research is based on an initial study of 9,000 people.
Last week I was invited to virtually assist Ken Cella, chef Edward jones Client Services Group and Maddy Dychtwald, author and founder of Age wave, as they shared in a media presentation some of the research’s most interesting findings.
For many of us, the sheer fear of the virus, loss of income or layoffs and the death of loved ones has forced us to face the precariousness and sudden changes that life can bring.
The study found that 76% of Americans attributed the pandemic to helping them “refocus on what is most important in life.” A third (32%) of Americans say they now have “more clarity on how they want to live their lives.”
Despite the health risk of the virus on retirees, they reported greater optimism than others, with a majority (61%) saying the pandemic has given them “more appreciation for what makes sense to life ”(compared to just 46% of all other Americans).
Meanwhile, more than half of retirees (53%) say they now have “greater empathy and compassion for people who struggle in ways they don’t know”.
Useful = Young
Most retirees say that the four pillars (health, family, goal and finances) are crucial for optimal well-being in retirement, which makes sense to me. And retirees, compared to younger Americans, are much more likely to say “having a purpose in life” is essential for achieving optimal well-being (69% vs. 55%).
But surprisingly, at least for me, the goal is sliced and diced in a range of definitions. The one I’m thinking of is not at the top of the list. The lion’s share of retirees, 67%, said spending time with loved ones gave them the most sense of purpose. Only 40% of them set a goal like me: give back to others and be generous.
There is no difference when it comes to feeling useful 93% of retirees strongly agree and 87% say they are useful helps them feel young. I like this concept.
But 86% of Americans and 89% of retirees agree there should be more ways for retirees to use their talents and knowledge to “benefit their communities and society.” And retirees say they would ideally like to volunteer or volunteer 3.3 hours a week, nearly four times the volunteer rate of retirees in recent years.
Applauding on that.
The biggest financial worry
As might be expected, the overall fear of future healthcare and long-term care costs as well as remaining savings became a major concern for respondents as the health crisis engulfed us.
The costs of healthcare, including long-term care, are the biggest concerns of retired retirees: 58% in March 2021, up from 52% in May 2020; 32% fear they will not have saved more than 30% in 2020. Unexpected expenses (56%) and a major economic slowdown or recession (38%) remained the other main concerns.
Pre-retirees 50 and over are even more concerned about health and long-term care spending than retirees, with 66% citing this as a major financial concern, and one in three have delayed their retirement plans.
Current retirees have some regrets. Most current retirees (61%), in fact, wish they had better planned the financial aspects of their retirement. However, very few pre-retirees over 50 think about how to save enough to survive retirement and what activities will give them meaning, meaning and fulfillment.
The majority (54%) of retirees would also like to have better planned the non financial aspects of their retirement such as how they would use their time meaningfully, manage their health, and consider where they should live.
Now for two downers the study revealed. Only 36% of retirees and 44% of Americans in general believe that “retirees are highly valued in today’s society”.
Can you say ageism?
Women and retirement savings
The second hard dose of reality. Women are in trouble. If you’ve been following how women have been criticized during the pandemic with the loss of jobs, you know where this is going.
The pandemic has intensified the economic gender gap. I wrote about how women need to take control of their financial lives earlier this year.
For example, among early retirees, more women than men reported a negative impact on their job security (39% vs. 20%). Women’s retirement account balances are on average two-thirds (67%) of men’s, according to this report. Confidence in retirement savings rebounded among men, but not among women.
This has serious repercussions on the future pensions of women much more than those of men.
It’s the hard truth, there is no vaccine for it.
Kerry Hannon is an expert and strategist on work and employment, entrepreneurship, personal finance and retirement. Hannon is the author of more than a dozen books, including Great Pajama Jobs: Your Complete Guide to Working from Home, Never Too Old to Get Rich: An Entrepreneur’s Guide to Starting a Mid-Life Business, Good jobs for everyone 50 and over, and Money trust. Follow her on Twitter @kerryhannon.