Pandemic Pinches Some Workers’ Savings Plans

Number of the Day: The most relevant or interesting figure in personal finance

NOTD - 63%

That’s how many workers in a survey said they were building a large enough retirement fund, a decline from last year, as people continue to deal with pandemic setbacks to their savings.

Some 38% of workers said they had been laid off or furloughed during the pandemic or had their hours or salary cut, affecting their ability to save, the Transamerica Center for Retirement Studies said Tuesday. Twenty-nine percent of respondents in the Transamerica poll said they “strongly agree” and 34% said they “somewhat agree” they are saving enough for retirement, a total of 63%, down from 68% the year before.

The poll was conducted between October and December 2021, when the stock market was repeatedly hitting new highs. Since then, high inflation and gas prices, along with concerns that the economy will get worse, have sent stocks significantly lower and made saving for retirement even more challenging. The benchmark S&P 500 stock index is in a bear market, defined loosely as a drop of at least 20% from a stock or index’s recent peak, and many individual stocks are down even more. Retirement savers, who often have significant stock holdings in their 401(k)s and IRAs, are seeing the effects on their savings as they look at their monthly statements. 

The Harris Poll surveyed more than 5,800 workers on behalf of the Transamerica Center, a nonprofit organization promoting retirement planning.  The results showed that 79% of employed workers have a retirement plan, with most starting to save at age 27, and they hold an estimated median retirement account of $65,000.  However, 39% of workers have taken money out of their retirement accounts, primarily through either loans or hardship withdrawals. 

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