Survey: Pandemic Is Hurting Retirement, Financial Security Ambitions

TheStreet talks with Country Financial exec about how pandemic is hurting America's plans for the future.

As the economy sputters amid shutdowns and lockdowns in response to the novel coronavirus outbreak and the nation's jobless rate rockets to nearly 15%, one of the newest casualties of the pandemic is the nation's already fragile state of financial and retirement planning. 

According to a recent survey by Country Financial, nearly half of Americans say they are less financially secure since the Covid-19 tragedy, and a third say they were not financially prepared for such a public health disaster. 

The survey also found that approximately two in five Americans are just struggling to pay "day-to-day" expenses amid the pandemic and many worry about paying their bills on time. A little over a quarter of Americans, meanwhile, say their "top" financial goal is saving for an emergency fund and only 16% say that goal is saving for retirement. Only 5% say their top goal is investing in the stock market. 

TheStreet asked Troy Frerichs, vice president of investment services at Country Financial, about the survey, which was compiled by Ipsos, an independent research firm, and includes responses from about 1,025 U.S. adults. The interview was via email through a spokeswoman and it has been edited minimally for length and clarity.

TheStreet: So, it sounds like from reading these results that an already stretched America is even more stretched, in terms of financial security and planning for the future. Is that an accurate takeaway?

Frerichs: Yes – our survey found that 49% of Americans say that their level of financial security is worse since the pandemic began. To give you a look into how the Gen-Z/millennial population alone is doing, five in 10 Americans aged 18-34 reported being confident in their ability to pay money they owe as the debts come due, which is down from seven in 10, reported in October 2019. Many Americans were already having difficulty making these types of debt payments before the pandemic began. Now, the pandemic has exacerbated that issue, making it harder for Americans to get by day-to-day. 

TheStreet: What seems very concerning is that nearly half of the respondents say their main goal now is having enough for day-to-day expenses. Do you fear those numbers will rise as we continue to get worse jobless numbers?

Frerichs: It’s difficult to predict how exactly Americans’ priorities will shift over time, given all the different variables at play. We know from our survey that the majority of Americans -- 85% -- are concerned about the future of the economy, but we don’t know the exact turns the economy will take or how the government may act in response, which will have a significant impact on the state of Americans’ finances and what they’re prioritizing. 

That being said, when it comes to matters of their own personal finances, Americans should focus on what they can control versus what they cannot. 

Even if day-to-day expenses continue to be Americans’ primary concern, they should see this time as an opportunity to re-group and get on a good financial track. For the immediate time, they can assess their financial situation and create a plan knowing that we might have rocky times ahead of us. Once they’ve done a good job preparing for those immediate needs, that’s when they can turn their attention back to the long term.

TheStreet: It seems like this problem could be exacerbated as 39% of people are having trouble paying their bills on time as found in the survey now means others will not be getting paid what they had expected to get paid, too, right?

Frerichs: It’s true that the pandemic has had a deep ripple effect. Our study found that while lower income Americans have been impacted the most by the pandemic, a majority of Americans have been impacted to some extent. In the long run, few will be immune to the effects of this crisis. What uncertain Americans can and should do now is focus on controlling on what they can—mainly what they spend, and what costs they can cut—and sticking to a realistic budget to help them get through this challenging time.

TheStreet: With such a small percentage of Americans even focused on retirement planning before the pandemic and now some of those stopping contributions altogether, are you concerned that if this goes on for any length of time, it will cause even bigger troubles for Americans who might be approaching retirement age?

Frerichs: For Americans who are feeling more secure in their ability to pay day-today expenses, the pandemic presents an opportunity for to re-assess future goals. While we are facing short-term volatility in the market, it’s important that Americans anchor themselves back to their long-term goals.   

Now is the time to talk with your financial representative about how the pandemic has affected your finances and your future plans. As a result of the pandemic, your risk tolerance levels may have changed, you may need to diversify your strategy, or you may have decided to work longer so you can save more before retiring. Discussing these concerns with your financial representative can get you back on track.

TheStreet: This pandemic is disproportionately hitting several minority groups, in terms of financial security, according to the study. Why do you think that is and what do you feel might help alleviate this problem?

Frerichs: The pandemic has had the most devastating impact on America’s most financially vulnerable communities, including minority and low-income individuals and families. We need to be aware of these statistics and come together as communities to support our most vulnerable members with financial education.