(AmericanProsperity.com) – In just two months, life has changed dramatically for everyone. Nearly 40 million people have filed unemployment claims, and experts are comparing the economic devastation of COVID-19 to the Great Depression. The toll on Americans is far-reaching. Not only are wallets getting thinner, but retirement accounts are also being depleted to help cover living expenses.
A survey conducted by MagnifMoney reports the retirement accounts of 1,239 Americans show a bleak picture of life in America during the pandemic. Nearly 30% have withdrawn money from their accounts, with 19% more retirees planning to withdraw funds from their retirement savings. That being said, the CARES Act signed into law in early April made it easy and less expensive to access retirement funds.
Key Findings in the Study
The average withdrawal amount from retirement savings between March 1 and May 1 was $6,757. Over 50% of those taking money out of retirement accounts did so to cover expenses during the lockdown. Twenty-five percent did so immediately after losing a job. The remainder did so because the CARES Act eliminated the penalty for early withdrawals from savings. Others were covering money lost in investments.
The study also revealed how people are spending the money meant for retirement savings. Approximately 60% said it was to pay for groceries, 42% to pay bills, 31% on mortgage payments or rent, and 27% to pay on their debt.
The study also found that 60% of Americans who took money out of their savings account regret it. Yet, 72% say they will replenish the funds after the pandemic.
Many Fear COVID-19 Will Force Them to Forgo Retirement
According to a recent SimplyWise survey of 1,070 Americans, 56% are more concerned about retirement compared to the same time last year. In the first 3 months of 2020, the average 401(k) dropped 20% in value due to the stock market decline. Social Security is also hurting thanks to exceptionally high unemployment and fewer tax revenues.
Unfortunately, 40% fear that COVID-19 ruined retirement for them. Half of those who were recently furloughed believe they won’t have a job to go back to, or their income will be cut in half this fall. Of those currently working, 30% think they’ll be laid off or lose half their pay within 6 months.
Worse yet, 67% of working people plan to continue working into retirement instead of enjoying their golden years. For those who are already on Social Security, 11% are considering selling their homes to cover their day-to-day expenses. Another 10% are considering refinancing their homes to get access to cash built up in their home’s equity.
The only certain thing moving forward is uncertainty as some states open, and others remain closed through July. Retirement experts say it’s best to leave retirement funds alone, if it all possible. Experts also don’t recommend taking Social Security early for those who are qualified.
~Here’s to Your Prosperity!
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