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Home>Daily Capital>Guides>Retirement Realities: The State of Americans’ Retirement Plans During COVID-19

Retirement Realities: The State of Americans’ Retirement Plans During COVID-19

While the economy may have stabilized a bit since its major contraction during the early days of the COVID-19 pandemic, the contentiousness around the presidential transition and a winter that is marking a resurgence of virus cases are enough to still have people on edge. Drastic market swings and unpredictable events are the last thing investors want to see, especially as retirement savings hang in the balance.

We used anonymized Personal Capital user data in conjunction with a survey of more than 1,000 people with a current retirement plan about the reality of their retirement savings. We examined who is currently following best practices, what changes people have made or contemplated since the onset of the pandemic, and what people wish they’d done differently when it comes to setting themselves up for retirement. Continue reading to see what we found.

The State of Retirement Accounts at the Close of 2020

As the coronavirus expanded beyond the borders of China back in March, fears of a global pandemic sent markets plunging. That initial drop actually manifested three of the worst percentage point drops in U.S. history.

The markets have since rebounded, and it appears that people looking to bolster their retirement savings appeared to bounce back from the initial shock of the pandemic. Personal Capital’s user data on average monthly 401(k) contributions show that the average amount people contributed dropped in April and May – across all age groups – as uncertainty around the impact of COVID-19 ran wild.

The tentative optimism of the summer seemed to level off, though, as average amounts contributed gradually decreased again in October and November. This could be due to the surge of virus cases in the U.S. recent months, throwing the country into what many are calling a “COVID winter.”

Retirement Savings Practices in 2020

It’s not a stretch to think that people’s habits around saving for retirement may have changed since the onset of the pandemic. In terms of best practices, the current habits of the people we surveyed were a mixed bag.

Over 50% of people reported currently contributing to their 401(k) every paycheck. People in their 30s, though, were most likely to report doing so. Experts typically consider people’s 40s and 50s to be the highest-earning decades of their careers. So developing the habit of saving while in their 30s could be setting these people up well to be able to maintain and accelerate savings when their earnings reach their peak.

Around 49% said they were receiving the maximum match from their employer. There could be a number of reasons why more people aren’t getting a full match. Around a quarter of our respondents (23%) reported currently being retired. Additionally, many employers have found themselves in the position of needing to cut costs to stay afloat amid the economic fallout of the pandemic, and temporarily reducing or cutting 401(k) contributions is a fairly straightforward step and one that has been implemented during previous economic downturns.

Only 33% of people overall said they were aligning their retirement accounts with their goals and risk tolerance. While risk tolerance fluctuates throughout a person’s lifetime, it’s particularly important to consider when getting closer to retirement age. Younger investors can afford to take on more risk as they have a longer stretch to make up for any dips in value. This can explain why people aged 60-plus were most likely to say they were aligning accounts with their goals and risk tolerance.

Taking Action in a Global Pandemic

The pandemic has been impacting the U.S. for nearly eight months now, and a lot has happened since the coronavirus first starting wreaking havoc. We had surveyed people on their concern about the virus’ impact on their finances versus their health earlier in the pandemic, so we wanted to check how views had evolved.

Over 72% of people said they were most concerned about COVID-19’s impact on their health, while only 27.8% said they were more concerned about the pandemic’s impact on their retirement savings. It’s worth noting, though, that finances and health are inextricably linked where COVID-19 is concerned. Treatment for COVID-19, depending on severity, can run tens of thousands of dollars. Add the fact that unemployment has left many people uninsured, and the link between health and finances becomes all the more prominent.

People were also asked about actions they may have taken since the pandemic that have impacted their finances and retirement readiness. Nearly 43% reported that they’d started a side hustle specifically to save or contribute more to retirement. Nearly 30% reported starting their own business or becoming self-employed, with men being more likely than women to report doing this.

American Investors Feel Like They Are Not Doing Enough For Retirement During COVID-19

Developing and practicing good habits around retirement planning is difficult even without a global pandemic. People were asked to report where they had fallen short before when trying to save for retirement. They were asked to report if they had ever done something, regardless of when or circumstances. Given that gender has a large impact on finances (see the gender pay gap) and that women have shown to be most vulnerable to the financial impacts of COVID-19, we looked at differences in past retirement savings actions by gender.

Women were more likely than men to say they’d failed to save enough (46.7% compared to 39.1%). However, men were more likely to say they’d made a risky investment before. A big gender difference was also found concerning neglecting to rebalance a portfolio: 28.3% of men said they’d overlooked rebalancing a portfolio before, compared to just 21.1% of women.

The actions people have taken, both good and bad, concerning their retirement aren’t just different by gender. Age can also impact what people have done in regard to their savings. Where people are in their life can impact how they view their retirement situation.

For example, 50.6% of people aged 60+ said they’d not saved enough at some point, compared to just 28.5% of people in their 20s who felt the same. It could be that people in their 20s are so early on in their careers and retirement saving journey that they underestimate what they’ll need for retirement.

People in their 50s were most likely to say they’d ever made a risky investment, though 43.5% of people in their 20s said the same. Meanwhile, people in their 20s, who are likely new to investing, were the most likely to say they’ve made the mistake of not planning for taxes.

Reflecting on Past Retirement Decisions After a Difficult Year

Everyone makes mistakes. With experience comes the knowledge that some decisions may not have been the best moves to make at the time.

People were asked how they wished they’d handled their retirement savings in hindsight, particularly whether they wish they’d been more conservative or more aggressive. Interestingly, people were fairly split on this, with 39% of people saying they wish they’d been more conservative and another 39.3% saying they wish they’d been more aggressive. More than 1 in 5 people said they would make no change.

Nearly 86% of respondents reported having at least some regrets about previous retirement savings decisions they’d made, with 9% saying they regretted previous decisions to an extreme extent.

Staying on Track in Tough Times

While findings show that many people are still following retirement savings best practices and working on building the financial future they want in retirement, the coronavirus pandemic has prompted Americans to consider and take actions they might not have otherwise, like decreasing retirement contributions and taking coronavirus-related distributions from their retirement accounts.

While a majority of people reported being more concerned about the pandemic’s impact on their health than on their retirement savings, many still reported regrets about past retirement savings decisions and wished they’d decided to take different approaches with their retirement savings strategy.

Personal Capital combines expert financial advice with an intuitive interface, giving you an easy way to monitor your accounts and investments.This can give you more control over your goals and your financial future. To learn more about how Personal Capital can help you reach your retirement goals, visit today.

“Don’t be ashamed if you feel regret or if you’d made mistakes in your retirement planning. As we see in the study, you’re not alone in feeling this way! It’s never too late to change the course of your retirement — you may have to make some adjustments like working longer, but what we’re recommending is that people really focus on the long term and do the best they can to try to course-correct and get back on track,” says Amin Dabit, a Personal Capital CFP®.


We surveyed 1,002 people who reported currently having a retirement plan. Respondents were 59.7% men and 40.3% women. One respondent chose not to disclose their gender. The average age of respondents was 44 with a standard deviation of 14.1.

Respondents were asked to report whether they currently practice particular retirement savings habits. This was asked as a check-all-that-apply question. Therefore, percentages won’t add to 100. The same was done when asking respondents about additional financial actions they’ve taken since the COVID-19 pandemic, such as starting a side hustle or transitioning to self-employment.

When asked about specific actions they had taken regarding their retirement savings since the pandemic, respondents were given the following options:

  • I have done this
  • I have considered this but not actually done it
  • I haven’t done this

When asked about how they would’ve changed their retirement savings strategy in hindsight, people were given the following scale of options:

  • Much more conservative
  • More conservative
  • No change
  • More aggressive
  • Much more aggressive

In our final visualization of the data, these were combined into three groups: more conservatively, no change, and more aggressively.

The data we are presenting rely on self-report. There are many issues with self-reported data. These issues include, but are not limited to, the following: selective memory, telescoping, attribution, and exaggeration.

Fair Use Statement
Whether retirement is right around the corner or decades away, it’s natural to worry about the state of your retirement savings. If someone you know would benefit from the information in this project, you’re welcome to share for any noncommercial reuse. We ask that you link back here so the project can be viewed in its entirety and the methodology can be reviewed. Additionally, it gives credit to our contributors, who make this work possible.

The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

Any reference to the advisory services refers to Personal Capital Advisors Corporation, a subsidiary of Personal Capital. Personal Capital Advisors Corporation is an investment adviser registered with the Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training nor does it imply endorsement by the SEC.

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