Originally published on TIAA.com.
The global COVID-19 pandemic not only presents a tremendous threat to people’s health and lives, but is also challenging the financial security of families across the nation.
Focusing on the long term, despite economic instability
Rethinking what’s important
Securing long-term financial resiliency
- Increasing retirement savings: Saving for retirement is a top contributor to financial resilience, yet many report feeling off-track. Despite their uncertainty, retirement remains a top financial priority for many as they balance short- and long-term financial pressures.
- Having a source of guaranteed lifetime income in retirement: Individuals identified guaranteed lifetime income in retirement as the second-greatest contributor to financial resiliency. The majority (9-in-10) agree that once they reach retirement, it will be important to have a source of income that will not run out as they age. Of those who have guaranteed lifetime income, 7-in-10 say that knowing income will be there for them in retirement has made them feel more financially resilient throughout the COVID-19 pandemic. Those who have a source of guaranteed lifetime income are also more likely to feel positive about their finances looking forward over the next year: 64 percent mention an emotion like optimistic, calm or content when looking ahead vs. just 51 percent of those who do not have a source of lifetime income.
- Building an emergency savings fund: Prior to the pandemic, 69 percent of respondents reported having emergency savings, with 47 percent believing those funds would cover 6+ months of expenses. Despite ongoing financial hardships, 77 percent of individuals now report having emergency savings.
- Paying down debt: Debt is common for many individuals today. More than 80 percent of respondents say they have some form of debt, with credit card debt as the most common (52 percent). But, nearly one quarter of Americans say they have four or more different types of debt and among those, a quarter reported taking on new debt amid the pandemic. This number increases to 4-in-10 for those under 40 years old. The impact of debt on long-term savings is immense; while 55 percent of Americans who report having “easily manageable” debt say they are on track to save for retirement, the same is true for only 24 percent of those whose debt is “just manageable” and only 6 percent of those with “unmanageable” debt.