Even though the coronavirus pandemic has increased health concerns among retired Americans, their financial well-being has been more immune. But these retirees still have money worries: Their adult children’s.
Close to 1 in 2 retired Americans said the pandemic has made them worry about their children more, according to a study by Edward Jones, a financial advisory firm. About 24 million Americans have already had to provide financial support to their adult children during COVID-19.
If the pandemic’s economic effects linger and that intergenerational help continues, some retirees may end up hurting their own financial security down the road.
“I am finding that most retirees who have planned properly for their retirement are not worried about their retirement. They are worried about the health of their family and the financial situation of their adult children,” said Angela Dorsey, founder of Dorsey Wealth Management in Torrance, Calif. “Some of my clients are experiencing their adult children moving back home due to a job loss. Some of my clients are needing to send their adult children money just, so they can survive.”
Retirees are faring well
More than 9 in 10 Americans view retirement as a time to improve their mind, body and spirit, according to the Edward Jones study. Part of the reason is that they’re financially more secure — even during the pandemic.
Only 16% of baby boomers and 6% of those in the Silent Generation said the COVID-19 crisis has extremely or very negatively impacted their financial security, according to the study. That’s much lower than younger generations.
Part of the reason is that retirees don’t depend on jobs — which have been hit hard — for income. Retirees receive an average of $1,500 per month in Social Security benefits, while couples receive an average of $31,000 per year according to the study. That doesn’t include other retirement savings many also receive.
Additionally, more than three-quarters of retirees own their homes with 6 in 10 not owing mortgage payments.
‘A spike’ in 401(k) withdrawals and loans
By contrast, younger generations are struggling with money, job losses, and uncertainty.
Nearly a third of Gen Zers and millennials say their personal finances have been impacted by the pandemic. More than a third of Gen Zers have received financial support from their parents, while more than a quarter have moved in with their parents.
Only 46% of workers are confident in their retirement savings, down from 58% before the pandemic according to Edward Jones study. About 20 million Americans have admitted they stopped making retirement contributions altogether.
Some workers even dipped into the retirement savings. For instance, at the end of the second quarter, 711,000 investors, or 3%, had taken a CARES Act distribution from their retirement account, according to the latest study from Fidelity Investments.
“We saw a spike in COVID related distributions and loans,” said Nathan Voris, managing director for Schwab Retirement Plan Services. “But the group that has done that is still less than 3%.”
‘They would like to do more’
The hardship young adults are facing is weighing on their parents, who have become more likely to jeopardize the remainder of their retired years, if it means helping their family financially. More than 7 in 10 retirees said they would fall back on their financial goals if their family needed their help, according to the Edward Jones study.
Marguerita Cheng, CEO of Blue Ocean Global Wealth, a financial advising firm, is seeing this firsthand with some of her clients whose adult children are experiencing financial turbulence.
“They help their adult children when they can, but they would like to do more, but know that if they do too much, they may not be able to sustain themselves in retirement,” she said. “Seventy-four may sound old, but it's not when you still have relatives who are living well into their 90s.”