After roughly a year since the COVID-19 recession began, some signs of recovery in the U.S. labor market are starting to emerge. Americans are feeling slightly better about their finances than they were at the start of the pandemic. The widespread availability of multiple COVID-19 vaccinations and the countrywide easing of several restrictions of economic activity are positive indications for the country's recovery from the crisis.
However, many Americans regret using their retirement funds to make ends meet during the crisis, though they thought they had no other alternative. This regret exacerbates Americans' ability to save money, especially those behind retirement savings, combined with a lack of income, providing a significant barrier to saving efforts.
COVID-19's negative financial impacts continue to undermine Americans' capacity to save money. Nonetheless, certain groups of Americans have been hit worse than others by the economic downturn.
Lower-income individuals are among the most likely to report that they or someone in their family has lost a job or had their income slashed. Also, forcing some to increase debt or delay paying expenses to make up for the loss since the pandemic began in February 2020.
Also, in a new report by Pew Research Center, nearly half of non-retired workers believe the economic repercussions of the COVID-19 pandemic will make it more difficult for them to meet their financial objectives.
In another survey by MagnifyMoney, 1 in 4 Americans now plans to retire later than expected as a result of COVID-19; that figure includes over 40% of Americans who have lost income due to the pandemic.
According to MagnifyMoney, almost half of respondents have either stopped saving altogether or decreased contributions to savings for a period, crediting slow recovery from this crisis. A fifth of this group says they have started or increased their savings, while a small portion hasn’t started saving again. Justifying their withdrawal from savings and retirement accounts, Americans say paying off debt, benefiting from the relaxing of rules for those accounts, job loss, or they have become more risk-averse to the stock market.
While taking an early withdrawal may appear to be a good idea for some fast money, it might significantly jeopardize your long-term retirement plans. Call us to discuss how you can integrate a reverse mortgage into your retirement plans to help protect your assets, give you an option of retirement income, and the peace of mind to reach your retirement goals.
Marc has 36 years in financial services and 6 years in teaching.
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