Unemployment is reported rising while many businesses rearrange their financial incentives for employees, including healthcare benefit, wages, bonuses and retirement plan. Money Rates survey on retirement plans showed that the corona crisis will force employees aged 45 to 64 to delay their retirement. Richard Barrington, a senior financial analyst who conducted the survey, wrote that coronavirus seems to leave a decades-long impact. This is a big setback as the survey found that $3.8 trillion in retirement savings were gone by April 3. This indicates that there is a drop of 25 percent from the previous year.
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Barrington’s survey also revealed that 36.4 percent of individuals in the age group 20 years from retirement said that their plans to retire would be delayed. Employers are temporarily suspending 401(k) contributions, and 43.8 percent of respondents reported losses at least 10 percent of the retirement savings. Meanwhile, half of 43.8 percent respondents said losses were more than 20 percent.
Not only does COVID-19 reduce and delay retirement for those who should retire early, the crisis also affects other plans like housing, benefit, long-term care and family plan. Retirement expert told in a podcast that for many, housing is part of retirement savings and is the largest item of expense in retirement. And COVID-19 creates a new set of housing challenges because of the need for isolation and staying at home. The crisis also created challenges with regard to the affordability of housing and the need to make appropriate housing decisions in retirement.
With COVID-19 resulting in a great deal of investment volatility and in short-term unanticipated financial challenges, many people would need advice for some critical guidance. Anna Rappaport, FSA, Chair of the SOA’s Committee, said in the podcast that individuals need emotional as well as financial support and guidance. There is significant concern about overload information and general misinformation out there which can lead to decision-making paralysis and confusion. Fraud has also become a major concern, with many scammers taking advantage of the crisis. Therefore, it is vital to turn to professionals like financial advisers. Employers, in this situation, would also be much needed to provide financial guidance for employees.
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