The stock market may have recovered from the first shocks of the pandemic, but Americans’ retirement savings might not be as lucky.
A majority of Americans — 60% — withdrew or borrowed money from qualified retirement plans since COVID-19 first arrived in the U.S., two-thirds of whom did so to pay for basic living expenses, according to a new survey from Kiplinger’s Personal Finance Magazine and financial firm Personal Capital.
Nearly a third of the 744 respondents surveyed withdrew $75,000 or more from a retirement account, and another 58% borrowed between $50,000 and $100,000 the poll found. A third of people said they planned to work longer to compensate for the financial hit to their nest eggs.
Men and women approached their investments differently, however. Significantly more men — 65% — took advantage of COVID-19 relief programs, compared with 28% of women, but they were also more likely to take a distribution or borrow from their retirement accounts (49% versus 14% and 44% versus 11%, respectively). Women were less likely to make a change to their stockholdings, and less likely to check their accounts daily. Almost four in 10 men were willing to take on more investment risks, compared with 9% of women.
The impacts of the pandemic on retirement savings are yet to be seen. While some Americans have already had to take out of their retirement savings to pay for short-term expenses or other emergencies, COVID-19 is still wreaking havoc on Americans’ personal finances. Cities are still in lockdown, some industries — such as travel and recreation — are still suffering, leading to job losses or reduced wages.
The pandemic also has the potential to move up the date in which Social Security’s reserves run out of money, or lessen the monthly checks beneficiaries receive in the future.