Transamerica Research: Workers Concerns Toward Retirement During COVID-19

Every year—for two decades now—the nonprofit Transamerica Institute and its Center for Retirement Studies survey workers and employers about retirement, publishing incisive reports that note trends and offer keen advice for employees and employers. Here at Real Research, we will analyze the 2019 survey and an early 2020 study to see what has changed amid the COVID-19 pandemic in workers’ minds toward retirement.

• As a result of COVID-19, 58 percent of workers say that they have experienced an impact on their employment situation.
• 23 percent of the workers say their confidence in their ability to retire comfortably has declined in light of the pandemic.
• Millennials, Gen Z, and Baby Boomers experience similar fears toward retirement despite their age gap.

According to Transamerica Center for Retirement Studies (TCRS), 2020’s exhaustive study began to be prepared in late 2019, one of the largest and longest-running of its kind, including more than 5,200 workers in the survey. However, an unprecedented pandemic was installed globally, and the team of researchers returned to survey 2000 people to gauge the impact of the coronavirus pandemicon retirement confidence and workers’ outlooks.

During December 2019, among a US nationally representative sample of 5,277 workers of the three generations—Baby Boomer workers, Generation X workers, and Generation Z workers—were surveyed. To consolidate the survey and verify the participants and the accuracy of their responses, TCRS  used Census data as a reference for education, age by gender, race/ethnicity, region, household income, and the number of employees by company size.

Retirement Confidence Has Changed

Transamerica’s survey highlights the importance of understanding where the workers’ confidence in retirement stands amid COVID-19. To the question “How has your confidence in your ability to retire comfortably changed in light of the COVID pandemic?” almost one in four workers—corresponding to 23 percent—said their confidence has declined.

Despite the similar results in the overall survey, the decline in retirement confidence increases with age: Millennials (20 percent), Generation X (25 percent), and Baby Boomers (32 percent). Fifty-three percent of workers say their retirement confidence remains unchanged, while 13 percent said it has improved, and 11 percent answered: “don’t know or not sure.”

As workers are paid (during retirement) in the US, according to the years they worked and paid taxes, it was also crucial for TCRS to understand how employment has been impacted by the coronavirus pandemic.

In the US, 58 percent of the surveyed workers said they had experienced pandemic-led effects in their employment situation, including reduced work hours for 29 percent. 17 percent experienced a reduced salary, 16 percent were laid off, 11 percent furloughed, and 5 percent retired early.

US Citizens Count on Their Saving If Finances Are Negatively Impacted

When TCRS asked workers what sources of funds they have used or would use if their finances have been or would be negatively impacted by the coronavirus pandemic, the most frequently cited source is savings with a response of 56 percent. 29 percent mention credit cards, 26 percent mention unemployment benefits, among others that can be observed in the chart below.

Younger Workers Are Most Likely to Save For Retirement

When inquired about their savings for retirement, around seven out of ten workers are currently saving through their current employer’s retirement plan or outside the workplace. However, Millennials with a percentage of 72 and Generation X with 74 percent, are somewhat more likely than Baby Boomers with 70 percent, to be saving for retirement.

As a result of the COVID-19 pandemic, workers confess to feeling a financial squeeze. A meaningful part of the respondents corresponding to 22 percent is dipping or planning to decline their retirement savings by taking a loan or withdrawing from their retirement plans. 15 percent of the respondents already used money from similar plans, and 13 percent have plans to do so.

Many Have Not Recovered From The Great Recession

In December 2019—even before the onset of the COVID-19 pandemic—many workers were still financially recovering from the Great Recession in 2007. Despite the fact that 47 percent of workers have said they fully recovered from the previous crisis, it still concerns that 32 percent answered they had somewhat recovered, and 14 percent had not yet begun to recover. The chart below refers to the Great Recession, but, in 2020, according to most of the Finances’ specialists, the COVID-19 recession has already been much greater than the previous crisis, which implies an even worse financial scenario in the future.

Amid COVID-19 Recession Many Changed Their Financial Priorities

Following the study conducted in December and the survey conducted in April 2020, some responses started to change during the pandemic. Amid the COVID-19 collapse, the percentage of workers who indicate “saving for retirement” as a financial priority dropped from 54 percent before the pandemic to 45 percent. On the other hand, those affirming “building emergency savings” slightly rose from 37 percent to 39 percent. Please observe the table below to understand the differences between December 2019 study and April 2020.

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For over 20 years conducting surveys and studying workers’ retirement prospects, TCRS saw the need to modify its annual survey due to the pandemic. Although it was completed in April—when it was not yet known that the pandemic would last for months—the results already predicted different priorities regarding reforms and other consequences. With all eyes on the vaccine, the world expects a deeper recession, but it is possible to recover if a cure for COVID-19 is found by early mid-2021.