Need to Know: How "The New Normal" Will Shape Retirement Planning
Fidelity Investments’ annual State of Retirement Planning Study is out and the results indicate that most Americans are ready to put COVID-19 in the rearview mirror when it comes to retirement planning. Although people are wary, they most respondents acknowledged that they accept a new normal is here, and there are hints of optimism Key findings include:
80% of Americans express confidence that they will be in the driver's seat for their own retirement
Only one in four respondents say they are less confident about their retirement than before the pandemic.
71% say they are concerned about inflation's impact on retirement readiness, and, importantly, 31% say they don't know how to ensure that their retirement savings keeps pace with inflation.
65% of respondents plan to put the pandemic behind them in 2022. When focusing just on the next generation of retirees (taking out Gen X respondents), that number jumps to 74%.
38% of next generation retirees are more confident about their retirement prospects than they were before the pandemic, compared to just 17% of Gen X respondents.
Gen Xers are more optimistic about "bouncing back" from COVID's negative effect on their retirement, with 29% estimating it will take a year or less — that number drops to 17% for next generation retirees.
Some other notable trends among the next generation of retirees include:
61% turned to robo advisors for support and help navigating their financial futures, vs. 35% of the general population.
55% of next generation retirees put their planning on hold during the pandemic, as compared to 41% of the general population. In addition, nearly half (45%) of next generation retirees saw no point in saving for retirement until things "got back to normal." As the financial crisis of 2008 showed, this is not necessarily a smart strategy.
Not surprisingly, the Great Resignation is affecting younger investors, with over 80% saying they are more focused on following their passions, even if it means cashing out their 401(k) plans.
What can help investors of all ages feel more confident? Without a doubt, a retirement plan gives everyone a confidence boost:
91% of individuals with a plan feel confident about being able to control when and how they retire (67% without a plan).
84% of individuals with a plan are more likely to know how much money they need to retire (59% without a plan).
77% of individuals with a plan express that they are more equipped to respond to inflation (57% without a plan).
16% of individuals with a plan might retire later due to COVID (29% without a plan).
While COVID-19 has changed many things — one fact endures: a plan is an essential part of retirement confidence and preparedness! We can help. Contact Robin S. Weingast & Associates today to speak to a member of our team.