How has COVID-19 Changed Retirement Planning?
Earlier this month, Forbes Advisor conducted a YouGov survey of 9,675 U.S. adults to better understand how people are handling their financial priorities amid the current crisis. All in all, nearly 72% of respondents indicated they made no changes to their retirement plans. Of those age 55 and older, the percentage skewed higher to 79%, while 61% of those age 25 to 34 reported making changes during this time.
Since more than 36.5 million Americans have filed for unemployment in the past few months, many are struggling financially. Even so, most respondents indicated they had not taken advantage of the changes outlined in the recent CARES Act. Only 4% of respondents have taken a loan from their 401k; 5% have taken a withdrawal from their 401k or IRA without the typical 10% penalty tax; and only 5% are planning to skip a Required Minimum Distribution (RMD) this year. Those percentages skewed a little higher for respondents between ages 25 and 44, so more younger workers are making use of these changes.
Just 11% of respondents affirmed COVID-19 would require them to work longer than they had planned, and only 1% of those ages 55 and older said the crisis would force them to retire earlier than expected.
As the crisis continues, more U.S. adults may have to adjust their retirement plans. For the time being, however, many financial professionals maintain patience is key. It’s best to ride out the market volatility especially if you are able to and if you’re not close to retirement age. Those investments will likely regain value over time.
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