The pandemic reduced retirement savings in 2020

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A significant number of savers had to tap into their retirement accounts

Amid the economic distress caused by the coronavirus (COVID-19) pandemic, Americans’ retirement savings accounts have been a casualty. A poll by personal finance publisher Kiplinger and wealth management firm Personal Capital reported Americans are now less confident they can retire comfortably.

In another sign of economic distress, about a third of poll respondents reported they were forced to take either a loan or a distribution from their retirement accounts last year to meet expenses. 

Nearly a third withdrew more than $75,000. Uses of the money ranged from meeting everyday expenses to helping other family members.

Even as the stock market was racing to daily new highs, many retirement savers failed to benefit. Kiplinger categorized participants’ investment mix as “conservative,” meaning they weren’t invested in stocks that were driving the market. Worse still, Kiplinger reported 24 percent of Americans’ portfolios were in cash.

Confidence level drops

Only 40 percent of participants said the pandemic and its effects had not altered their financial confidence. Twenty-seven percent said they are “somewhat” less confident while 16 percent admitted to being “far less confident.”

So how has that changed consumers’ financial planning for retirement? Just over a third were able to say it hasn’t changed it at all. But here are the other answers:

  • I plan to work longer: 35 percent

  • I plan to save more: 34 percent

  • I plan to curtail travel or other activities I expected to do in retirement to save money: 20 percent

  • I changed my retirement financial projections: 12 percent

  • I will claim Social Security benefits earlier than I originally planned: 8 percent

  • I decided to hire a professional adviser: 7 percent

A financial advisor can sometimes help you get back on track financially. They give advice and help you create strategies to achieve your short- and long-term money goals, such as planning for retirement.

ConsumerAffairs has collected thousands of verified reviews of financial advisors here.

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