Chances are Americans -- and certainly Boomers -- will be happy to see the year 2020 come to a close. Too many of us have had to deal with the unanticipated health, social and financial impacts of the pandemic. And it is likely that the effects of 2020 will linger long into next year.
One of the key financial challenges for Boomers is the "COVID recession." According to retirement expert Teresa Ghilarducci of The New School, "about 50 percent of workers over the age of 55 will be poor or near-poor adults when they reach 65." One of the reasons for this, says Ghilarducci, is that "Older workers are losing their jobs at a faster rate, relative to younger people and relative to where they had been before than they were in the Great Recession. ...When older workers lose their jobs, they lose access to savings. They lose their employer's contribution, and they face the temptation of drawing down their retirement assets."
Still, those Boomers with at least $100,000 in investable assets, including their retirement savings, are more optimistic, reports Charles Schwab, based on its "2020 Modern Retirement Survey." The survey of 2,000 Americans age 55 to 75 indicates that 84 percent believe their quality of life in retirement will be better than that of their parents. On average, the survey respondents have accumulated $920,400 in retirement savings, and 82 percent of them think this amount will take them "all the way" or "most of the way" to living out the retirement of their dreams. But Rob Williams, VP of financial planning and retirement income at Charles Schwab cautions that this amount "will only last about seven years at their expected spending rate." He says that Boomers "may have other sources of income like Social Security, but the only way retirees can make sure the math adds up is by putting pen to paper and having a plan in writing."
TIAA's recent "Financial Resiliency Survey" provides a broader look at the American public's view of the future. In July, TIAA surveyed 3,040 Americans age 25 to 70 with a household income of at least $40,000. Nearly 60 percent of adults said the pandemic caused financial stress, and now two-thirds of them want to save more money. One third of respondents had their employment affected, 26 percent took on more debt and 18 percent were forced to dip into an emergency fund. Despite this, 90 percent of workers said saving for retirement is a current financial goal -- but only 40 percent think they are on track with their retirement savings and 27 percent said they are far from on track. One key problem is that Americans generally don't look far enough ahead: 56 percent said they only consider the next 12 months when it comes to financial planning, and less than 3 in 10 individuals said they typically consider 5-plus years into the future. When asked what contributes most to financial resiliency, 59 percent of those age 60 to 70 and 53 percent of those age 50 to 59 said "having more set aside in retirement savings."
How does your thinking compare with the Boomers who responded to the above surveys? Are you looking ahead with cautious optimism as we prepare to enter next year? Here's hoping the lingering effects of 2020 are short-lived -- and 2021 brings a semblance of sanity and a financial rebound for all of us.
HappilyRewired.com is a Top 75 Baby Boomer Blog.