While the majority (79 per cent) of U.S. employees remain confident they’ll be able to retire when and how they want, a quarter are less confident than they were before the coronavirus pandemic, according to a new survey by Fidelity Investments Inc.
The survey, which polled 2,600 workers, also found 71 per cent said they’re very concerned about the impact of inflation on their retirement and a third (31 per cent) don’t know how to make sure their retirement savings keep up.
Two-thirds (65 per cent) said 2022 is the year they put the pandemic behind them to focus on the future, a number that increases to 74 per cent among generation Z and millennial respondents. Almost four in 10 (38 per cent) of these younger respondents said they’re more confident about their retirement prospects than they were two years ago, compared to 17 per cent of generation X respondents.
More than half (55 per cent) of respondents aged 18 to 35 said they put their retirement planning on hold during the pandemic, while 45 per cent said they don’t see a point in saving for retirement until things return to normal and 39 per cent said they now plan to retire later than expected. Among younger respondents who quit their job during the pandemic, roughly 20 per cent opted to cash out their 401(k).
Among gen-Zers and millennials who said the pandemic has negatively impacted their retirement plans, 29 per cent estimated it will take a year or less to recover, while 27 per cent of gen-Xers said it will take four to five years to get their retirement plans back on track.
The survey also found many employees may end up drawing down their nest egg too quickly. Roughly 20 per cent of all respondents — as well as 20 per cent of gen-Xers and 15 per cent of baby boomers — thought a financial professional would recommend an annual withdrawal rate of 10 to 15 per cent.