A survey conducted by Greenwald Research in early 2021 showed that 41% of millennials and 39% of Gen Xers indicated that the pandemic has at least some negative impact on their finances. This compares with 33% of late baby boomers (those born between 1955 and 1964); 29% of early boomers (born between 1946 and 1954); and 25% of those who are older than this.
Edward A. Zubow, Investment Advisor for Wedbush Securities in Scottsdale, Arizona points out, “Many businesses were forced to lay off, at least temporarily, a significant amount of staff and, often times, that came at the expense of less tenured, not highly compensated and younger employees. Because many of them lost their jobs, many of them had to use the penalty free 401(k) withdrawals offered by the CARES act just to survive. Many of those who were fortunate enough to have savings to live off of couldn’t really afford to run out and open an IRA just to compensate for the lost ability to contribute to their long-term retirement savings. For those younger employees that were fortunate enough to hold on to jobs, many of them saw the employer match feature of the company 401(k) plans suspended – in some cases indefinitely.”
The financial issues faced by millennials and Gen Z during the pandemic for many were just another set of issues they have faced, most notably the recession and financial crisis of 2007-2008.
How the Younger Generation compares to Older Generations
One notable finding in the Greenwald survey was that 64% of the millennials surveyed indicated that they have shifted their financial focus to goals with a duration of a year or less, versus focusing on longer-term goals like retirement.
In contrast, two-thirds of early boomers about two-thirds or early boomers felt that they were still on track towards a comfortable retirement in line with their goals.
The survey results indicated that 57% of millennials and 49% of Gen Xers were worried about the impact that the pandemic and the resulting financial issues including job loss or reduced compensation may have on their ability to save for retirement. They expressed concerns about being able to maintain their standard of living and to be able to accumulate enough retirement savings to cover things like healthcare in retirement.
During the pandemic some 40% of millennials and 33% of Gen X indicated that they had experienced either a job loss or reduced compensation of some sort during the pandemic.
The younger generations have concerns about job security and are very concerned about their debt levels getting in the way of their ability to save for retirement. Student loan debt is a major component of these concerns.
Delaying or changing retirement
The pandemic seems to have had an impact on the retirement plans of workers across all generations. The survey results indicated that about 35% or all workers have indicated that they have at least considered changing their target date to retire, with most of those indicating they are considering a delay in their retirement date.
In addition to any impact on when they might retire, Greenwald indicated in their survey 38% of the study respondents indicated that the pandemic has changed their view of what their lifestyle in retirement might look like. Additionally, 55% of the pre-retirees surveyed indicated they didn’t see the point of retiring during the pandemic as they likely would not be able to do the types of activities they had planned for their retirement.
The pandemic is one of those life changing events on many fronts. The impact on many people’s finances, including their plans around retirement has been profound.
If you are feeling unsure about your retirement planning, please feel free to contact one of our Wedbush Financial Advisors for help in reviewing your situation and managing your investments to help achieve your goals.
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