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Retirement NewsMore Than 8 In 10 Americans Say Pandemic Hurt Their Retirement Plans | #retirement | #elderly | #seniors

More Than 8 In 10 Americans Say Pandemic Hurt Their Retirement Plans | #retirement | #elderly | #seniors

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More than eight in 10 Americans indicate the events of the past year have hurt their retirement plans, with one-third estimating it will take two to three years to get back on track, due to such factors as job loss or retirement withdrawals, according to Fidelity Investments’ 2021 State of Retirement Planning Study.

Encouragingly, most are still confident they’ll be able to retire when and how they want, and 36% are now even more confident in their retirement plan than before, asserts Melissa Ridolfi, senior vice president of retirement and cash management at Fidelity Investments.

The study, which focuses on the impact of the past year on retirement plans, points to the positive impact having a retirement plan in place can have on helping people weather the storm. Still, according to the findings, nearly four in five respondents indicate they reevaluated their priorities this past year. While the level of concern has diminished in some areas since the start of the pandemic, when compared against the pre-pandemic world, people are still more stressed than before on several fronts.

“This past year has been a roller coaster, but for those Americans with a retirement plan, it should come as a relief to know the fundamentals remain sound,” Ridolfi says.

Although the survey indicates 36% of Americans are more concerned now than at the start of the pandemic regarding their ability to maintain a nest egg in retirement, retirement savings accounts reached record levels in the fourth quarter of 2020.

“(We) also experienced record levels of planning engagements with clients throughout the year,” Ridolfi claims.

For those looking to strengthen their financial future, the study validates the important role planning can play, she says. According to the findings, simply taking steps to visualize a plan for retirement can lead to a greater sense of confidence and control.

Overall, when it comes to how people are planning for retirement, Americans fall into three categories, with one-third saying they have a plan in place to achieve their goals, 31% having thought about it in great detail, and the remaining share of respondents having yet to start planning, Ridolfi says.

Across the board, those with the most detailed plan in place to achieve their goals reported experiencing the greatest confidence, she says, adding that even the simple act of getting started on a plan can have a positive impact.

Millennials are slightly more likely than their older counterparts to report having a plan to afford their desired lifestyle in retirement (35%), compared to members of Generation X (34%), or baby boomers (32%), even though boomers are closest to retirement. Part of this may be attributed to the fact that millennials are nearly twice as likely to have reported using online tools and calculators than Boomers.

Ridolfi says these tools can provide the instant gratification of seeing a plan taking shape with just a few clicks, something many have become accustomed to in a digital age.

Additionally, the key considerations, or ingredients for a “plan” differs by generation. For those 30 years from retirement, including most millennials, having a plan means they’ve determined how much they should be saving on a regular basis and what accounts they should put those savings into based on tax and investing considerations. As people start to get closer to retirement, they need to think and plan for more complex topics.

“For those with a longer time horizon, it may be comforting to know that putting a plan in place may be easier than you think and will give you the perspective to focus on what you need to do to achieve your goals,” says Ridolfi. “If you are closer to retirement, the good news is, it’s never too late to start planning for your future, regardless of age or income. The study findings clearly show that creating a plan for retirement can lead to a greater sense of confidence and control and ultimately give people a better feeling about where they stand at any age.”

Here are some key findings of the study.

*Only 25% of respondents accurately indicated that financial professionals recommend that people have 10-12 times their last full year of working income saved by the time they reach retirement. Half of all respondents thought the figure would be only five times their final-year income or less.

*Regarding withdrawals, 28% of respondents say that financial professionals would recommend a withdrawal rate of 10% to 15% of retirement savings every year. Withdrawing that amount, however, would likely use up retirement savings quickly and would be far above many financial advisers’ suggested annual withdrawal rate of 4% to 6%.

*Almost three-quarters (72%) of respondents believe the stock market has seen negative returns more frequently than positive ones over the past 35 years. In reality, the stock market has had a positive annual return for 26 out of the past 35 years.

*Most respondents underestimate the cost of out-of-pocket health care for a couple in retirement, with 37% guessing between $50,000-100,000. In fact, for a couple retiring at 65, the actual average cost throughout their retirement is estimated three times higher, at $295,000.

*Although people can start receiving Social Security retirement benefits as early as age 62, they have to wait a few more years before they reach full retirement age. Claiming Social Security benefits before full retirement age can lock in a permanent reduction in monthly income. Only 17% correctly identified their full retirement age for Social Security, including 44% of Gen Xers, who tended to underestimate their full retirement age of 67The

findings were compiled from a national online survey with responses from 1,204 adult financial decision makers who weren’t retired.

Respondents had at least one investment account and those over age 34 had at least $100,000 investable assets.

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