money Many Americans need years to get their retirement savings back on track after the pandemic
As the nation enters the 13th month of the pandemic, many Americans say it will take them between two and three years to get their retirement plans back on track, one new survey found. But most remain optimistic.
More than 4 in 5 Americans said the pandemic’s economic fallout affected their retirement plans, according to Fidelity Investments’ 2021 State of Retirement Planning Study that polled 1,204 adults who were not retired, with a third estimating they’ll need at least two years to recover. More than a third reported being more concerned about their ability to maintain a nest egg in retirement than before the pandemic.
Read more: Expert: Retirement investors should embrace uncertainty as their new normal
Widespread job losses forced some Americans to dip into retirement accounts to keep their households afloat, with the financial instability postponing or resizing retirement priorities and prospects for 79% of respondents, the survey found.
Still, the vast majority remain confident they’ll be able to retire when and how they want, and 36% are now even more confident in their retirement plan than before, the survey found.
“What stood out as a surprise was that cautious optimism,” John Boroff, Fidelity’s director of retirement and income solutions, told Yahoo Money. “It relates back to the key thing that people can do to get themselves back on track and that's really all centered around the umbrella of planning and having a plan.”
Read more: Here's how to get your retirement savings back on track
Calling the process “critical,” he said that “people with [financial] plans, feel better, and tend to do better,” and have less anxiety and improved confidence.
The resiliency of the stock market also likely played a role in that optimism. After bottoming out on pandemic fears on March 23 last year, the S&P 500 hit a new high on March 17 this year and is up 57% since its trough. The performance, boosting retirement account balances and creating a record-breaking number of millionaire retirement savers.
'Establishing a stake in the ground'
For those who need to play catchup, age is a big factor, according to Boroff. For younger people with the bulk of their working years ahead of them, a plan can be as informal as setting a target dollar amount and learning what types of available investments exist.
For Gen Xers, Boroff tailored his advice to “add in a notional target retirement age” and “start thinking about what types of expenses you're really going to have in retirement.” Then as retirement age approaches, add in thoughts about income streams like Social Security.
Read more: Study: Retirees more than doubled their debt in 2020
Unpredictability is a constant, but planning around the unknown alleviates some of the stress when emergencies strike.
“Just establishing a stake in the ground can do a lot for helping people feel like they're taking the right steps,” Boroff said. “It really is just about getting this stuff top of mind and revisiting it regularly.”
Stephanie is a reporter for Yahoo Money and Cashay, a new personal finance website. Follow her on Twitter @SJAsymkos.
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