Pandemic highlights the important role Social Security and
Medicare will play in American retirement
COVID-19 has raised fresh concerns about Americans’ retirement
preparations, with some saying the pandemic has permanently
impacted their ability to save for retirement, according to the
2020 Wells Fargo Retirement study conducted by The Harris Poll in
August, which examines the attitudes and savings of working adults
and retirees.
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Particularly for workers whose employment has been negatively
impacted by COVID-19,1 retirement has become an even more
challenging goal over the last eight months, with many expressing
pessimism about their life in retirement – or worried if they can
retire at all. Fifty-eight percent of workers impacted by the
pandemic say they now don’t know if they have enough saved to
retire because of COVID-19, compared to 37% of all workers.
Moreover, among workers impacted by COVID-19, 70% say they are
worried about how to make sure they don’t run out of money in
retirement, 61% say they are much more afraid of life in
retirement, and 61% say the pandemic took the joy out of looking
forward to retirement.
Retirement savings provides a more striking contrast, showing
that COVID-19 has driven some workers even further behind: Working
men report median retirement savings of $120,000, which compares to
$60,000 for working women, according to the study. Yet for those
impacted by COVID-19, men report median retirement savings of
$60,000, which compares to $21,000 for women.
“With individual investors now largely responsible for saving
and funding their own retirement, disruptive events and economic
downturns can have an outsized impact on their outlook,” said Nate
Miles, head of Retirement for Wells Fargo Asset Management. “Our
study shows that even for the most disciplined savers, working
Americans are not saving enough for retirement. The good news is
that for many of today’s workers, there is still time to save and
prepare.”
Women and Younger Generations
The study found that women and younger generations are also
falling behind. Women are less sure if they will be able to save
enough for retirement, and appear to be in a more precarious
financial situation than men. Barely half of working women (51%)
say they are saving enough for retirement, or that they are
confident they will have enough savings to live comfortably in
retirement (51%). Women impacted by COVID-19 have saved less than
half for retirement than men and are much more pessimistic about
their financial lives. In addition, women impacted by COVID-19 are
less likely to have access to an employer-sponsored retirement
savings plan (59%), and are less likely to participate (77%).
Similarly, though Generation Z workers started saving at an
earlier age and are participating in employer-based savings
programs at a greater rate than other generations, they are
nonetheless worried about their future. Fifty-two percent of
Generation Z workers say they don’t know if they’ll be able to save
enough to retire because of COVID-19, 50% say they are much more
afraid of life in retirement due to COVID-19, and 52% say the
pandemic took the joy out of looking forward to retirement.
Glass Half Full
At the same time, the study showed that despite a challenging
environment, many American workers and retirees remain optimistic
about their current life, their finances, and their future. A
majority of workers say they are very or somewhat satisfied with
their current life (79%), in control of their financial life (79%),
are able to pay for monthly expenses (95%), and feel confident they
are able to manage their finances (86%).
Sixty-nine percent of workers and 73% of retirees feel in
control and/or happy about their financial situation. In addition,
92% of workers and 91% of retirees say they can positively affect
their financial situation, and 90% of workers and 88% of retirees
say they can positively affect how their debt situation progresses.
And 83% of workers say they could pay for a financial emergency of
$1,000 without having to borrow money from friends or family. Yet
Americans acknowledge they could improve their financial planning.
Slightly more than half — 54% of workers and 50% of retirees — say
they have a detailed financial plan, and just 27% of workers and
29% of retirees have a financial advisor.
“The study found incredible optimism and resiliency among
American workers and retirees, which is remarkable in the current
environment,” said Kim Ta, head of Client Service and Advice for
Wells Fargo Advisors. “As an industry, we must help more investors
make a plan for their future so that optimism becomes a reality in
retirement.”
Pandemic Underscores Importance of Social Security and
Medicare
Despite an increasing shift to a self-funded retirement, nearly
all workers and retirees say that Social Security and Medicare play
or will play a significant role in their retirement — a reality
underscored by the pandemic. According to the study, 71% of
workers, 81% of those negatively impacted by COVID-19, and 85% of
retirees say that COVID-19 reinforced how important Social Security
and Medicare will be or are for their retirement.
Overall, workers expect that Social Security will make up
approximately one-third of their monthly budget (30% median) in
retirement. And even among wealthy workers, Social Security and
Medicare factor significantly into their golden year plans —
high-net-worth workers2 expect Social Security to cover 20%
(median) of their monthly expenses. The dependence by many on the
programs also drives anxiety: The vast majority of the study’s
respondents harbor concerns that the programs will not be available
when they need them and worry that the government won’t protect
them. According to the study:
- 90% of workers would feel betrayed if the money they paid into
Social Security is lost and not available when they retire.
- 76% of workers are concerned Social Security will be raided to
pay down government debt.
- 72% of workers are afraid that Social Security won’t be
available when they retire.
- 67% of workers have no idea what out-of-pocket healthcare costs
will be in retirement.
- 45% of workers are optimistic that Congress will make changes
to secure the future of Social Security.
- 23% of workers are willing to accept less from Social Security
to help pay down the national debt.
Vast majorities also want politicians to help with retirement;
76% of workers and 81% of retirees say retirement should be a top
priority for the presidential candidates, and 88% of workers and
91% of retirees say Congress needs to make it easier for workers to
access tax-friendly retirement plans.
About The Harris Poll
The Harris Poll is one of the longest running surveys in the
U.S. tracking public opinion, motivations and social sentiment
since 1963 that is now part of Harris Insights & Analytics, a
global consulting and market research firm that delivers social
intelligence for transformational times. We work with clients in
three primary areas: building 21st-century corporate reputation,
crafting brand strategy and performance tracking, and earning
organic media through public relations research. Our mission is to
provide insights and advisory to help leaders make the best
decisions possible. To learn more, please visit
www.theharrispoll.com
About the Survey
On behalf of Wells Fargo’s Wealth & Investment Management
division, The Harris Poll conducted 4,590 online interviews
including 2,660 working Americans age 18-76 whose employment was
not impacted by COVID-19, 725 Americans age 18-76 whose employment
was impacted by COVID-19, 200 high net worth American workers age
18-76, and 1,005 retired Americans, surveying attitudes and
behaviors around planning their finances, saving, and investing for
retirement. The survey was conducted from August 4 – August 24,
2020. Working Americans are 18-76 and working full time (or at
least 20 hours if they are working part time) or are self-employed
and whose employment has not been impacted by COVID-19. Americans
whose employment was impacted by COVID-19 are age 18-76 and
selected that they personally experience at least one of the
following due to the coronavirus pandemic: laid off from a job,
furloughed from a job, started working a reduced or staggered
schedule, been given a zero-hour schedule, or taken a pay cut. High
net worth workers are age 18-76 and have at least $1 million in
household investable assets. Retired Americans self-identified as
retired regardless of age. All respondents are the primary or joint
financial decision-maker for their household. Data are weighted
where necessary by age by gender, race/ethnicity, region,
education, income, marital status, employment, household size, and
propensity to be online to bring them into line with their actual
proportions in the population.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a diversified,
community-based financial services company with $1.92 trillion in
assets.* Wells Fargo’s vision is to satisfy our customers’
financial needs and help them succeed financially. Founded in 1852
and headquartered in San Francisco, Wells Fargo provides banking,
investment and mortgage products and services, as well as consumer
and commercial finance, through 7,200 locations, more than 13,000
ATMs, the internet (wellsfargo.com) and mobile banking, and has
offices in 31 countries and territories to support customers who
conduct business in the global economy. Wells Fargo serves one in
three households in the United States. Wells Fargo & Company
was ranked No. 30 on Fortune’s 2020 rankings of America’s largest
corporations. News, insights and perspectives from Wells Fargo are
also available at Wells Fargo Stories.
Additional information may be found at www.wellsfargo.com |
Twitter: @WellsFargo.
*As of Sept. 30, 2020
Wells Fargo Asset Management (WFAM) is the trade name for
certain investment advisory/management firms owned by Wells Fargo
& Company. These firms include but are not limited to Wells
Capital Management Incorporated and Wells Fargo Funds Management,
LLC. Certain products managed by WFAM entities are distributed by
Wells Fargo Funds Distributor, LLC (a broker/dealer and Member
FINRA).
Investment products and services are offered through Wells Fargo
Advisors, a trade name used by Wells Fargo Clearing Services, LLC
and Wells Fargo Advisors Financial Network, LLC, Members SIPC,
registered broker-dealers and non-bank affiliates of Wells Fargo
& Company. Wells Fargo Advisors associates referenced are
registered with Wells Fargo Clearing Services, LLC.
This material is for general informational and educational
purposes only and is NOT intended to provide investment advice or a
recommendation of any kind—including a recommendation for any
specific investment, strategy, or plan.
PAR-1020-01567 CAR-1020-02799
INVESTMENT PRODUCTS: NOT FDIC INSURED • NO
BANK GUARANTEE • MAY LOSE VALUE
1 The “COVID Impacted” are those whose employment status was
impacted in some specific way due to the pandemic, such as being
laid off/furloughed from a job, working a reduced or staggered
schedule, given a zero-hour schedule, or taken a pay cut. It does
not mean they are currently unemployed.
2 High-net-worth workers defined as those with $1 million in
Household Investable Assets.
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Media Rob Julavits, 646-618-2790
robert.w.julavits@wellsfargo.com
Sarah Kerr, 917-260-1582 skerr@wellsfargo.com
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