42 INVESTMENT ADVISOR JUNE 2020 | ThinkAdvisor.com
lic trustees since 2015. Says the report,
“These slots should be filled. Public
trustees play an important role in over-
seeing the program and communicating
its status to the public. Their continued
absence reflects a failure with the politi-
cal process, not with the program itself.”
The report concludes, “[O]nce
this crisis subsides, stabilizing Social
Security’s finances should be a high pri-
ority to restore confidence in our abil-
ity to manage our fiscal policy and to
assure working Americans that they will
receive the income they need in retire-
ment. The long-run deficit can be elimi-
nated only by putting more money into
the system or by cutting benefits. There
is no silver bullet.”
How the Pandemic Is Affecting
Retirement Confidence: EBRI
Most Americans are very or some- what confident about havingenough money to live comfortablythroughout their retirement, or at leastthey were before the rise of the coronavirus pandemic, found the 2020Retirement Confidence Survey by theEmployee Benefit Research Instituteand Greenwald & Associates.
A subsequent survey done at the endof March showed some erosion of confidence, especially for those workers whohad lost jobs due to the pandemic, whichmight be a harbinger of things to come.
Although the 2020 January surveyfound 69% of workers very or somewhatconfident of financial security in retirement, that number dropped to 63% inlate March. For those already retired,the pandemic didn’t seem to matter, asthe very or somewhat confident levelwas down slightly to 76% in March from77% in late January. However, in 2019,that number for retirees was 82%.
The group also surveyed workers andretirees on other aspects of retirement,finding differences between Januaryand March.
• In January, 75% of workers werevery or somewhat confident of havingenough money to cover basic expensesin retirement. But in March, that numberdropped to 69%, of which the very confident workers dropped to 24% from 33%.
• Asked the same question in January,
81% of retirees were very or somewhat
confident they would have enough money
to cover basic expenses in retirement,
•Medical expenses were more of a
question. For workers, 64% were confi-
dent they would have enough money to
cover medical expenses in retirement,
which dropped to 60% in March. Of those,
very confident respondents dropped from
22% in January to 17% in March.
• Of retirees, in January, 70% believedthey would have enough money forfuture medical expenses, a number thatincreased in March to 74%.
• Sixty-three percent of workers werevery or somewhat confident they wouldhave enough money to last the rest of theirlife, a number that fell to 57% in March.
• Retirees were more confident, with27% very confident and 41% somewhatconfident they would have enoughmoney to cover their lifetime, a numberthat rose from 68% to 74% in March.
•Long-term care, such as nursinghome or home care was more worrisome for workers, who were only 18%very and 36% somewhat confident theywould have enough money to cover it.That amount dropped to 50% in Marchfrom 54% in January.
•Retirees experienced no drop insame in confidence level from January toMarch. In January 52% were very (15%)or somewhat (37%) confident of havingenough money to cover long-term care.
Both workers and retirees were confident that Medicare benefits wouldcontinue at the same level. In January,
50%, up from 45% in 2019, of workers
were very or somewhat confident, and
that rose to 54% in March, while 66% of
retirees (down from 72% in 2019 but up
from 46% in 2018) were very or some-
what confident about Medicare, which
actually rose to 71% in March.
And Social Security? In January, lessthan half or 48% of workers (vs. 68% ofretirees) were very or somewhat confident that Social Security will continue to provide benefits at least equal invalue to the benefits received by retireestoday, which increased to 51% in March.
The researchers noted in the reportthat “the stability in retirement confidence is surprising to see given thecurrent health and economic crisisimpacting Americans.” Their conclusionis that “workers’ continued confidenceis likely reflecting Americans’ view thatcurrent conditions will pass before theyjeopardize long-term financial securityin retirement.”
That said, with the rise of unemployment during the coronavirus crisis,those who have lost jobs or have “negative employment status” is less rosy. Forexample, while 67% of workers were veryor somewhat confident they would livecomfortably in retirement, that droppedto 47% of those who had lost jobs. In fact,confidence scores in almost every category,from medical expenses to trusting SocialSecurity will continue to provide benefits,were down between 17% and 28% forthose with a negative employment change.
The January online survey was conducted of 1,018 workers and 1,024 retirees. The supplemental March surveywas of 505 workers and 499 retireesages 25 or older.
Ginger Szala can be reached at firstname.lastname@example.org.