Plans vs. Reality

Allianz Life’s 2021 Retirement Risk Readiness Study found that the COVID-19 pandemic had a detrimental impact last year on people’s plans to retire. Sixty-eight percent of those who left employment said this was earlier than they had planned, up from 50% who had to retire unexpectedly in 2019. Exactly one-third, 33%, blamed health issues, up from 25% in 2019. Only 22% cited unexpected job loss, down from 34%.

There appears to be a disconnect between people’s retirement plans and what actually occurs, as 70% of non-retirees said they expect to continue working, at least part-time, up from 65% the previous year. In reality, a scant 6% of retirees are still working, virtually on par with the 7% who had jobs in 2019.

Forty-three percent of non-retirees said they can afford to save nothing for retirement right now, up from 37%. Forty-two percent said they are too far behind on their retirement goals to catch up—an increase from 31%. Forty-nine percent said they are just trying to squeak by and cannot even think of saving for retirement, and 56% said stock market swings are making them nervous about their retirement savings.

“Although the full story of this pandemic won’t be known for some time, it’s clear that the financial security of many Americans has been severely compromised,” says Kelly LaVigne, vice president of consumer insights at Allianz Life. “It’s crucial that Americans use this opportunity to consider any new risks that could affect their retirement planning and develop strategies to help mitigate those risks and future unexpected events.”

Wake-Up Call

The survey does show signs of hope that Americans might be working to repair their savings, as 65% said they now pay more attention to what they save and spend, and 58% have cut back on their spending.

More near-retirees—those within 10 years of retiring—were taking action in 2020 vs. in the previous year. In particular, they said they were making sure they save enough in their retirement account—29% vs. 23%; diversifying their portfolio—42% vs. 27%; researching expenses and risks associated with retirement—43% vs. 35%; creating a formal retirement plan with a financial professional—37% vs. 29%; and purchasing a product that provides a guaranteed source of retirement income—38% vs. 30%.

The 2021 study’s findings are based on an online survey conducted in December 2020 among 1,000 people with an annual household income of $50,000 or more, if single; $75,000 or more, if married or living with a partner; or having investable assets of $150,000 or more.

Source: Allianz Life, 2021 Retirement Risk Readiness Study