The Discerning Investor by Julie Jason

Retirement Anxiety Heightened by COVID-19

The song “You Can’t Always Get What You Want” describes how people feel about retirement these days. That’s the song chosen by nearly half of the respondents in a survey released on July 29 by the Alliance for Lifetime Income, a nonprofit educating Americans about protected lifetime income in retirement.

Most people surveyed (7 out of 10) say “the pandemic has made them more pessimistic about their retirement plans” (with 63% being somewhat more pessimistic and 7% much more pessimistic). Now, people are rethinking how much money they will have when they retire (4 out of 10 surveyed).

That’s not surprising, considering the uncertainty caused by COVID-19.

In its “COVID-19 Retirement Reset #3 Tracker Report,” the Alliance identified three economic waves of the pandemic to this point in time (March 6-16; April 13-20; and June 18-22). Unemployment claims, deaths and the stock market all rose from wave 1 through wave 3. (Unemployment: 3 million in March; 33 million in June. COVID-19 deaths: 100 in March; 119,510 in June. Stock market: Dow at around 20,000 in March; around 26,000 in June.)

The majority of respondents (66%) are concerned about the economy and the investing environment impacting their retirement plans. However, that data point was lower than survey results in April (75%). In April, 67% of those who were concerned about the current economy and the investment environment said their investments “declined considerably,” yet that percentage dropped to 46% in June. Those worried about recovering their financial losses stood at 63% in April; in June, that was down to 42%.

A majority (60%) are “worried about future unpredictability as the crisis is taking a widespread emotional toll and eroding confidence.” That is an increase from 54% in April.

One of the bigger issues in retirement is how to support yourself when the paycheck stops. At that time, it’s important to review expenses and to characterize them as discretionary (your wants) and non-discretionary (your needs), as I discuss in my book “The Retirement Survival Guide: How to Make Smart Financial Decisions in Good Times and Bad.”

Sadly, only a third of survey respondents are “very confident they will have the income to cover all of their expenses in retirement.” What is a need vs. a want varies from family to family. Survey results showed that certain expenses “have grown in importance: Internet access, groceries, healthcare and housing costs.”

Most agree (8 in 10) that in retirement, “wants” are important to the quality of life. However, the majority (7 in 10) say they are “less than very confident they will have the money to fund all of their discretionary spending in retirement.”

The secret to successfully managing discretionary spending requires some homework and a timing system. I can offer you a chapter of “The Retirement Survival Guide” that lays out how to do this. (Email me at readers@juliejason.com; include the state you live in.)

Some (22%), according to the survey, want to have “the benefits of protected lifetime income that an annuity or pension" provides. This is an increase from 16% in April. That increase is also understandable, since pension-like income can be valuable for retirees who do not have the interest or skill to invest in the stock market on their own. You do need to evaluate those products of course, which I will cover in a later column.

While the outlook is challenging, there is still some optimism. Nearly a quarter of respondents cited the song “Time Is on My Side” as reflecting how they felt about retirement, while another 22% chose “I’m Free.”

Conducted by Artemis Strategy Group in June, the Alliance survey captured the views of 1,260 U.S. adults age 56 to 75 who had $100,000 or more in investable assets. They were either employed (full or part-time), temporarily laid off or unemployed due to COVID-19, or retired (either fully or working part-time). For more information on the survey, go to tinyurl.com/y6oeaqze.

Julie Jason, JD, LLM, a personal money manager (Jackson, Grant Investment Advisers Inc. of Stamford, Connecticut) and award-winning author, welcomes your questions/comments (readers@juliejason.com). Please visit www.juliejason.com.

DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION