The pandemic has made Jennifer White, 47, fearful about whether early retirement is possible.
White, director of education abroad at Eastern Kentucky University, is grappling with whether her goal of retiring at 60 is still achievable after the deadly virus upended the school’s study abroad programs in dozens of countries across Europe, Asia and South America.
“I already felt like I was playing catch-up with retirement. There’s a fear of what the future holds and an overwhelming sense of doom with the pandemic,” White says, who has been working from home. “Universities all over the country are experiencing lower enrollment, so it’s going to be devastating for higher education.”
Save better, spend better:Money tips and advice delivered right to your inbox. Sign up here
Retirement security shaken
The recession has rattled retirement plans for Americans, as income and savings have been pressured by rising unemployment and market swings.
About 30% of employed investors say it’s very or somewhat likely that they will delay the age at which they retire as a result of the recent economic downturn, according to the Wells Fargo/Gallup Investor and Retirement Optimism Index. A similar percentage, 29%, think it’s likely they will work more than they intended in their retirement.
In March, the Standard & Poor’s 500 index shed 30% from its record in just 22 trading days, the swiftest such drop in history. But stocks have recovered most of their losses since then.
"Folks are worried that they'll have to delay retirement to offset recent stock market losses," says Dan Barry, regional president at Wells Fargo Advisors. “But market downturns are inevitable. If folks are concerned, they should stay the course and rebalance their portfolio because markets have proven over time that it pays off to remain invested.”
A dream home, a vintage school bus and quirky roller skates:Here's what couples are buying with their pandemic wedding funds
I was furloughed and got too many unemployment checks:Here’s how I sent the money back
The survey, conducted from May 11-17 and given exclusively to USA TODAY, is based on interviews with adults in a household with stocks, bonds, or mutual funds of $10,000 or more, either in an investment account or in a self-directed IRA or 401(k) retirement account.
Of total respondents, 40% reported annual incomes of less than $90,000; 60% reported $90,000 or more. The median age of the nonretired investor is 45 and the retiree is 69.
Optimism suffers record decline
Investor optimism tumbled to a seven-year low in the second quarter due to the economic fallout from the coronavirus pandemic, the study showed. In the April to June period, confidence hit its lowest point since the fourth quarter of 2013, an about-face after confidence had touched a 20-year high in the first three months of the year. Optimism fell the most on unemployment and economic growth.
Investors have felt the effects of the pandemic on the job market. As of the May survey, 27% of nonretired investors had suffered a loss of income or pay, 15% had been furloughed or temporarily laid off and 1% had been permanently let go.
The coronavirus has also compelled one in four investors to take on more financial responsibility for family members. The largest percentage, 16%, reports providing greater financial assistance to an adult child, while 7% say they have assisted a parent, and 7% another relative.
Investors confident over the long haul
To be sure, trends in the poll signal that investors view recent market disruption as temporary, not as an alarm of systemic problems that will harm their investments in the long term.
Most investors remain optimistic about reaching their five-year investing goals even as their 12-month outlook for their own investments is down sharply. Roughly two-thirds of investors polled remain optimistic about reaching their five-year investment goals, according to the study.
Six in 10 investors continue to say now is a good time to invest in the financial markets. One reason why: cheaper stock prices.
“It’s really important to stay invested in a well, thought-out plan that aligns with your goals,” Barry says. "If you’re not invested, you can miss some of the market’s best days, which has historically shown could be detrimental to your portfolio in the long term.”