The pandemic has disrupted the retirement plans of more than one-third of Americans.
“The economic environment created by the COVID-19 pandemic has caused a lot of people to re-examine their financial lives,” said Christian Mitchell, executive vice president and chief customer officer at Northwestern Mutual.
“For some, the prospect of an early retirement appears more achievable, while others are adjusting for delays.”
For those planning to delay retirement because of the economic impact of the pandemic, most (39 percent) say they will push out retirement three to five years.
But more than a third (35 percent) say their timeline for retirement has shifted back more than 10 years. The top reasons cited for why people are delaying retirement include:
- Wanting to work and save money, given additional flexibility with their workplace (55 percent).
- Concerns about rising costs such as health care and/or unexpected medical costs (50 percent).
- Having to dip into retirement savings (24 percent).
- Taking care of a relative or friend, or being responsible for additional dependents (14 percent).
For those planning to retire earlier than expected, almost half say they are moving up their timeline by three to five years. The top reasons cited for moving up their target retirement age include:
- Wanting to spend more time with their loved ones (42 percent).
- Focusing on hobbies or priorities outside of work (33 percent).
- Realizing their personal mission is more important than saving more (29 percent).
- Work situation has changed (28 percent).
“Planning is not a one-and-done exercise,” Mitchell said. “It requires ongoing upkeep and the flexibility to respond to shifting circumstances. With so many people revisiting their financial timelines this year, active planning should be a priority. That requires attention, engagement and a willingness to take action, and having the support of a trusted advisor is critical in that process.”
On average, people have $98,800 saved for retirement, up from $87,500 last year.
At the same time, people’s expectations for how much they will need to retire comfortably also is up, from $950,800 in 2020 to $1,047,200 in 2021.
While overall retirement savings are up, more than four in 10 believe they may outlive their savings, up slightly from 41 percent last year.
“It’s clear that plans can unexpectedly change,” Mitchell concluded. “And while retirement might be a moving target for some, we’re seeing improvements in the ways people are preparing for their financial futures, and that’s a great thing.”