COVID-19 created challenging financial conditions for businesses, individuals, and families alike, with stay-at-home orders and mandated closures forcing many businesses to cut hours, enforce furlough, or terminate employees. This had a cascading effect on income and savings as many of those impacted turned to distributions or plan loans to bridge the gap and cover expenses.
Despite trying economic times, though, a substantial majority stayed the course with retirement savings – a surprising finding given the high level of uncertainty experienced since the start of the pandemic. According to the EBRI 2021 Retirement Confidence Survey, 69% of retirement plan participants made no changes to their retirement savings amount – and most respondents expressed a high level of satisfaction with their current workplace retirement plan. The survey also uncovered interesting information on retirement plan improvements, COVID-19’s impact on retirement savings, and more. Here are some of the top highlights.
About the Survey
Conducted online between January 5th and January 25th, 2021, the survey includes responses from 3,017 participants. This includes 1,507 individuals currently employed and 1,510 retirees with an oversample of roughly 500 Black Americans and Hispanic Americans. All respondents were aged 25 or older.
- COVID Impact on Savings Ability – The survey sought to understand how business closures and reduced work hours have impacted retirement savings. Just over half reported no impact, while 18% reported a minor negative impact and another 14% said the negative impact was major. 8% experienced a positive impact, while the remaining 9% said the question wasn’t applicable to their situation.
- Workplace Retirement Plan Changes – Another survey objective was to understand what changes employees made to retirement plan contributions – and found that 58% of respondents increased the amount of plan contributions, 23% stopped contributing, 22% decreased the contribution amount, 20% changed investments but stayed at the same risk level, 18% changed to more conservative investments, and another 18% switched to more aggressive investments.
- Retirement Planning Information – Understanding where people receive information about retirement planning was another focus area, and the survey also found that 35% of respondents rely on family and friends, 35% conduct online research, 27% consult their financial advisor, and 22% get information from their employer. 17% consult online advisors, 16% listen to financial experts in the media, 6% get information from church or religious centers, and 6% use libraries or community centers. Conversely, 17% of respondents said they don’t rely on any of these sources for obtaining retirement information.
- Overall Plan Satisfaction – How satisfied are plan participants with their plan? The survey found the overwhelming majority are very to somewhat satisfied. 78% say they’re happy with the fund or investment options their plan offers, and 77% expressed satisfaction with the online tools or calculators offered. 75% report being somewhat or very satisfied with the educational materials they receive. There was also curiosity about the overall level of plan satisfaction.
- Retirement Plan Improvements – The survey also gave respondents an opportunity to suggest retirement plan improvements they’d like to see. According to the findings, 33% would like a better explanation on how much income current savings will produce in retirement, 31% would like more fund or investment options, 30% better explanations of whether their savings are on track, 25% say they’d like more one-on-one one education, 25% want more educational tools, 24% want more post-retirement investment options, and 9% say they’d actually be happier with fewer overall investment options.
How does your retirement plan stack up?
The results paint an interesting picture of the state of retirement planning. While COVID certainly had an impact, it appears that overall plan satisfaction in key areas remains high. If you have questions about the survey results or would like to review your retirement plan strategies, contact us – our wealth management professionals are here to help.