{"id":7741,"date":"2021-03-26T11:18:00","date_gmt":"2021-03-26T16:18:00","guid":{"rendered":"https:\/\/rixtrema.com\/blog\/?p=7741"},"modified":"2021-03-26T11:20:55","modified_gmt":"2021-03-26T16:20:55","slug":"covid-impact-on-retirement-savings","status":"publish","type":"post","link":"https:\/\/rixtrema.com\/blog\/covid-impact-on-retirement-savings\/","title":{"rendered":"COVID impact on Retirement Savings"},"content":{"rendered":"\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-nk-awb nk-awb\"><div class=\"nk-awb-wrap\" data-awb-type=\"color\"><div class=\"nk-awb-overlay is-layout-constrained wp-block-nk-awb-is-layout-constrained\" style=\"background-color: rgba(208, 96, 27, 0.2);\"><\/div><\/div>\n<ul class=\"wp-block-list\"><li><a href=\"#PICTURE\">THE BIG PICTURE<\/a><\/li><li><a href=\"#IMPACTS\">IMPACTS ON INDIVIDUALS<\/a><\/li><li><a href=\"#SUMMARY\">SUMMARY<\/a><\/li><\/ul>\n\n\n<\/div>\n\n\n\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p><span style=\"font-weight: 400;\">It feels as though there is no corner of our lives that remains unaffected by COVID-19, including retirement futures. Recent studies have shed light on how plans are faring nearly a year after the pandemic began. <a id=\"PICTURE\"><\/a><\/span><\/p>\n<p>\u00a0<\/p>\n<h2><span style=\"font-weight: 400;\">THE BIG PICTURE<\/span><\/h2>\n<p>\u00a0<\/p>\n<p><span style=\"font-weight: 400;\">Most retirement plans are doing better than expected, but still feeling the effects of the pandemic as it draws on into 2021. A <\/span><a href=\"https:\/\/www.psca.org\/sites\/psca.org\/files\/Research\/2020\/401k%20Fall%20Snapshot_FINAL.pdf\"><span style=\"font-weight: 400;\">study by Plan Sponsor Council of America<\/span><\/a><span style=\"font-weight: 400;\"> found that most organizations are not considering any changes in plan design, but more than half are offering education about how loans and distributions affect retirement savings.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0The severity of the impact of COVID-19 depends largely on plan size. \u201cMore than one-in-ten (11.5 percent) plans with fewer than 50 participants have made changes to the matching contribution \u2014 three times the number of organizations with 5,000 or more participants.\u201d\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Most plans are implementing at least one provision of the CARES act, allowing for coronavirus-related distributions (CRD\u2019s) and pausing paydown of existing loans for up to a year.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The market has also recovered better than was expected, giving plan sponsors some relief. While markets are no substitute for contributions or withdrawals, they have helped keep plans in balance and to stay afloat.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">While it seems plans are, for the most part, coping well with the financial impact of the coronavirus pandemic, the heavy toll it has taken on individual participants may start affecting plans as a whole in the near future. <a id=\"IMPACTS\"><\/a><\/span><\/p>\n<p><br \/><br \/><\/p>\n<h2><span style=\"font-weight: 400;\">IMPACTS ON INDIVIDUALS<\/span><\/h2>\n<p>\u00a0<\/p>\n<p><span style=\"font-weight: 400;\">Plan participants are bearing the brunt of the impact of COVID-19 financial consequences. As the pandemic passes the 1 year mark, plan sponsors are seeing increased loans and withdrawals. In November, plan loans were reported at 25%, compared to 13% in June. A <\/span><a href=\"https:\/\/www.kiplinger.com\/retirement\/retirement-planning\/601934\/retirement-planning-during-covid\"><span style=\"font-weight: 400;\">survey by Kiplinger\u2019s Personal Finance<\/span><\/a><span style=\"font-weight: 400;\"> found that about a third of respondents have borrowed from their retirement savings, and 63% of those used the money for basic living expenses. <\/span><a href=\"https:\/\/www.fa-mag.com\/news\/retirement-plans-being-drained-for-covid-expenses-60412.html\"><span style=\"font-weight: 400;\">John Hancock Retirement reported<\/span><\/a><span style=\"font-weight: 400;\"> that though only 3.4% of plan participants withdrew money from their retirement savings, the average withdrawal was a staggering $20,768. As support from unemployment benefits and Payroll Protection Program, participants are turning to new revenue sources to stay afloat.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The pandemic has also exacerbated the retirement savings gap between men and women. A <\/span><a href=\"https:\/\/news.nationwide.com\/women-investors-concerns\/\"><span style=\"font-weight: 400;\">study by Advisor Authority<\/span><\/a><span style=\"font-weight: 400;\"> found that nearly three fourths of women investors say that the coronavirus pandemic has negatively impacted their retirement savings. This on top of the fact that women\u2019s retirement savings are already stretched thin by longer life expectancy, wage gaps, and higher likelihood of losing income to parental leave.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Changes in retirement readiness is also indicative of the effect on individuals. Kiplinger\u2019s reported that 35% of respondents said they plan to work longer, compared to the 34% percent who said they would make no changes. Retirement readiness is down 1% overall from one year ago, a number that is actually \u201cquite encouraging,\u201d according to Lynda Abend, chief data officer at John Hancock Retirement. <a id=\"SUMMARY\"><\/a><\/span><\/p>\n<h2>\u00a0<\/h2>\n<h2><span style=\"font-weight: 400;\">SUMMARY<\/span><\/h2>\n<p>\u00a0<\/p>\n<p><span style=\"font-weight: 400;\">These studies show that individual participants are feeling the financial consequences of the pandemic more than plans overall. Large plans have been more immune to the financial impact of COVID, and are implementing less changes than smaller plans.\u00a0<\/span><\/p>\n\n\n\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<figure class=\"wp-block-image size-large\"><a href=\"https:\/\/rixtrema.net\/larkspurexecutive\/landingpage?source=Kara-26-03-2021\" target=\"_blank\" rel=\"noopener\"><img loading=\"lazy\" decoding=\"async\" width=\"750\" height=\"137\" src=\"https:\/\/rixtrema.com\/blog\/wp-content\/uploads\/2020\/09\/larkspur-rixtrema-pro-and-platinum-min.png\" alt=\"\" class=\"wp-image-6880\" srcset=\"https:\/\/rixtrema.com\/blog\/wp-content\/uploads\/2020\/09\/larkspur-rixtrema-pro-and-platinum-min.png 750w, https:\/\/rixtrema.com\/blog\/wp-content\/uploads\/2020\/09\/larkspur-rixtrema-pro-and-platinum-min-300x55.png 300w, https:\/\/rixtrema.com\/blog\/wp-content\/uploads\/2020\/09\/larkspur-rixtrema-pro-and-platinum-min-500x91.png 500w\" sizes=\"auto, (max-width: 750px) 100vw, 750px\" \/><\/a><\/figure>\n\n\n\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n","protected":false},"excerpt":{"rendered":"<p>It feels as though there is no corner of our lives that remains unaffected by COVID-19, including retirement futures. Recent studies have shed light on how plans are faring nearly a year after the pandemic began.\u00a0<\/p>\n","protected":false},"author":22,"featured_media":7742,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[168],"tags":[317,2145,2146,172,108],"class_list":["post-7741","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-covid-19","tag-financial-consequences","tag-john-hancock","tag-retirement-plan-advisors","tag-retirement-plans"],"jetpack_featured_media_url":"https:\/\/rixtrema.com\/blog\/wp-content\/uploads\/2021\/03\/COVID-impact-on-Retirement-Savings-min.png","yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v15.9.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>COVID impact on Retirement Savings<\/title>\n<meta name=\"description\" content=\"It feels as though there is no corner of our lives that remains unaffected by COVID-19, including retirement futures. 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