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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.

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