New survey shows how the pandemic has affected pension trends

DES MOINES, Iowa – (BUSINESS WIRE) – The Indexed Annuity Leadership Council (IALC) today announced the launch of a survey examining the impact of the pandemic on pension trends. The study found that nearly a third (30%) of American workers said the pandemic had delayed their plans for retirement.

“The pandemic has affected the way retired Americans plan, save, and live, and created a financially insecure environment,” said Jim Poolman, executive director of the Indexed Annuity Leadership Council.

86 percent of Americans who want to retire say it is important to guarantee their income after retirement, and 42 percent of respondents said the pandemic made them more risk averse.

While this could indicate increased interest in products like fixed indexed annuities or FIAs that offer guaranteed lifelong income, market protection and minimal risk in retirement, more than half of respondents (51%) said they heard of fixed indexed annuity to have pension.

“We will continue to monitor the financial impact of the pandemic over the coming decades,” Poolman said. The IALC survey aimed to offset the financial impact of a pandemic and compare how that impact changed depending on how far respondents were from retirement.

“The Great Recession shaped and continues to shape the financial literacy and behavior of Generation X and Millennials more than a decade later. The COVID-19 pandemic and the resulting economic impact will have a similar lasting impact, “Poolman said. To illustrate, of those who said they had never heard of FIAs, 23% were 18-34 years old, 33% 35-54 years old, and 43% 55+. “We can see that this risk aversion in younger cohorts carries over to financial behavior in the future.”

Other top retirement trends and IALC survey results include:

  • Two-fifths of Americans (40%) say their savings have increased since March 2020, while 17% say they have lost weight. This correlates with income, as those in higher income brackets are more likely to say that their savings have increased, suggesting growing financial inequalities.

  • 37% of Americans said they had to draw on savings to cover daily expenses since the pandemic began, and 15% said they had to draw on them a lot. This is more pronounced in younger Americans, rising to 59% in 18-34 year olds, and less pronounced in older Americans, falling to 20% in 55 year olds or above.

  • 54% of Americans would consider working part-time to supplement their retirement income. For those looking to retire in the next five years, it is 69% and for those planning to retire in five years or later, it is 73%.

The IALC survey was sent to a nationally representative sample of approximately 2,000 participants and the data was collected in April 2021. To view the full results, click here.

For more information on fixed index pensions and pension trends, please visit the IALC education website or Twitter @IALCouncil.

Via the Indexed Annuity Leadership Council

The Indexed Annuity Leadership Council (IALC) brings together a consortium of life insurance companies with the aim of providing consumers, media, regulators and industry professionals with complete and factual information on the use of indexed annuities. Namely, that these products provide a source of guaranteed income, capital protection and interest rate stability in retirement, as well as a balance for any long-term financial plan.

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