Americans are determined to keep their hands off their retirement savings, even when faced with financial difficulties brought on by the worldwide pandemic.
Those saving in workplace retirement plans, including 401(k) plans, say they would rather cut back on spending or dip into their savings accounts before touching their retirement savings, according to a survey and new paper "Retirement as a Last Resort: How Americans Cope with Financial Need" from Empower Institute, the research arm of Empower Retirement.
In the survey1 respondents were asked how they have handled financial difficulty so far due to the economic effects of COVID-19.
- 35% said they reduced spending
- 15% said they dipped into savings
- 11% said they deferred a student loan
- 11% said they maxed out credit cards
Even if faced with a financial emergency, one third of Americans would rather sell something of value before dipping into their retirement savings.
"People across the country are facing tough financial situations and it’s challenging for them to stick to their retirement savings goals," said Edmund F. Murphy III, Empower Retirement President and CEO. "But working Americans are proving they are dedicated to protecting their retirement savings and their future financial freedom by pursuing other financial moves first to bridge any gap in income brought on by this pandemic."
The Empower Institute survey showed that as of June 28, 1.4% of eligible retirement plan participants completed a withdrawal under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) -- a $2.2 trillion economic stimulus bill passed by the Congress in March 2020 in response to the economic fallout of the COVID-19 pandemic in the United States.
Overall, the data shows that tapping retirement accounts to access money is often a last resort — if it’s something employees would consider at all, the paper says.
"As the pandemic continues, each person’s financial outlook will be very different and deeply personal," Murphy said. "It makes sense for savers to consider all of their financial options – get a look at their whole financial picture – and weigh the short-term and long-term outcomes."
Find more original surveys and research from Empower Institute here.
About Empower Retirement
Headquartered in metro Denver, Empower Retirement administers $679.8 billion2 in assets for more than 9.7 million retirement plan participants as of June 30, 2020. It is the nation’s second-largest retirement plan recordkeeper by total participants. Empower serves all segments of the employer-sponsored retirement plan market: government 457 plans; small, midsize and large corporate 401 (k) clients; non-profit 403 (b) entities; private-label recordkeeping clients; and IRA customers. For more information please visit empower-retirement.com and connect with us on Facebook, Twitter, LinkedIn and Instagram.
1The Harris Poll conducted an online survey, U.S. financial attitudes and behaviors, Wave 2, on behalf of Empower Retirement in April 2020. A total of 684 U.S. adults ages 18 and older with a defined contribution plan participated.
2As of June 30, 2020. Information refers to the business of Great-West Life & Annuity Insurance Company and its subsidiaries, including Great-West Life & Annuity Insurance Company of New York and GWFS Equities, Inc. GWLA’s consolidated total assets under administration (AUA) were $679.8B. AUA is a non-GAAP measure and does not reflect the financial stability or strength of a company. GWLA’s statutory assets total $50.1B and liabilities total $48.8B. GWLANY statutory assets total $1.68B and liabilities total $1.57B.
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